SLVP: Silver Mining Companies Are Likely Overvalued

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Summary

  • SLVP invests in silver mining companies globally.
  • Based on a conservative but in my opinion reasonable set of assumptions, SLVP's portfolio is most likely expensive.
  • I would not want to assume that silver prices will rally over the next few years, and without that assumption, SLVP's portfolio looks potentially dramatically overvalued.
  • Given the negative-skewed risk/reward, I would take a strong bearish view on SLVP. I think that SLVP could in fact be an interesting short opportunity for market-neutral traders/investors.

Piles of silver coins

AK2

iShares MSCI Global Silver Miners ETF (BATS:SLVP) is an exchange-traded fund that provides investors with access to publicly-listed silver mining companies. The expense ratio is 0.39%, with assets under management of $193 million as of December 5, 2022. That makes the fund

SLVP ETF Net Fund Flows

ETFDB.com

Gold/Silver Ratio

TradingView.com

Silver Prices

TradingView.com

SLVP ETF Price Action

TradingView.com

Weighted risk-free rate for SLVP

Author's Calculations

SLVP ETF IRR Gauge

Author's Calculations

This article was written by

Hedge Insider profile picture
1.57K Followers
Providing commentary and analysis, principally focused on global macro, foreign exchange, and equities as an asset class. Primary interests include equity investing from an international perspective, and FX fair values.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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