Silver may be known as a shiny, precious metal, but its performance in 2012 has been anything but desirable. Amid savage, Europe-induced repudiation of the risk on trade, the iShares Silver Trust (SLV), the largest physically backed silver ETF, has gone from stellar gains earlier in the year to a small year-to-date loss. Rest assured, that loss looks like it will grow larger in the near-term.
Silver's slide has led to another concerning situation: A wicked tumble for shares of silver mining ETFs and the equities that track them. As has been the case with gold and gold miners over the past 18 months, perhaps longer, anytime that silver has offered upside the miners have lagged. Not surprisingly, that makes the miners particularly vulnerable when silver futures tumble, which they have recently.
As we just mentioned, SLV has only recently erased its 2012 gains. On the other hand, the Global X Silver Miners ETF (SIL) is down almost 20% on the year. In the past month, SLV is down 12.1%, but SIL has slid 20.4%.
Then there is the case of SIL's only rival, the newly minted iShares MSCI Global Silver Miners Fund (SLVP). Talk about a case of bad timing. The iShares MSCI Global Silver Miners Fund debuted on January 31. Since then, the ETF has plunged 32% and now has less than $2 million in assets under management. For its part, SIL has lost about $90 million in AUM since the start of the year.
It's easy to point fingers when it comes to ETFs. All one needs to do is look at the underlying components. For those wondering why SLVP is down so much, here's why: The fund devotes more than 30% of its weight to just two stocks. That pair is Silver Wheaton (SLW) and Buenaventura Mines (BVN), which are down 25.4% and 14% in the past month, respectively.
Underscoring the ugliness silver miners have had to endure as of late, Buenaventura's 14% loss is actually good by comparison. Coeur d'Alene (CDE) and Pan American Silver (PAAS) are both off by 25% in the past month. Silver Wheaton, Pan American and Coeur d'Aline represent a quarter of SIL's weight. Combine the four stocks we've mentioned here and you got over 40% of SLVP's weight.
Bottom line: This is a risk off environment where even gold is being tossed aside like yesterday's newspaper. Without gold moving higher, it will be next to impossible for silver to buck the trend. The longer silver futures languish and fall, the more vulnerable the already vulnerable miners become. It's that simple.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.