Whenever I make a purchase, I like to share my buys to document my journey towards financial independence. This latest purchase diverges from the normal buys that I normally pursue, as I shared in this post - Multipronged Approach to Investing. So far, I have relied on companies with growing dividends, but the current market leaves me nervous wanting me to look elsewhere. I started to look at contrarian trades and looking for undervalued assets and decided to make further moves in this space.
Last week, I shared my first move in the precious metals space with a purchase of Silver Wheaton Corp (SLW.TO) (details here). Continuing with the theme, this time I am directly targeting a mining company. Investing in precious metals can take many forms and I have discussed some methodologies here and here. To recount from those articles, investors may choose to invest using bullion (comes with ownership/storage costs), ETFs (paper contracts, loses the point of investing in precious metals) or mining companies (comes with risk, such as exploration risks, management issues, lack of understanding space etc).
Last month, I initiated a position in Pan American Silver Corp (PAA.TO) (also trades as NASDAQ:PAAS) with 100 shares @ C$19.09. The company yields 0.26% adding US$5 to my annual passive income. Nothing to write home about. But as I mentioned earlier, this investment is not focused on the dividend, but a contrarian move strengthening my precious metals position.
Pan American Silver Corp. (Pan American) is engaged in the production and sale of silver, gold and base metals including copper, lead and zinc, as well as other related activities, including exploration, extraction, processing, refining and reclamation. The Company's primary product (silver) is produced in Peru, Mexico, Argentina and Bolivia. The Company has project development activities in Peru, Mexico and Argentina, and exploration activities throughout South America, Mexico, and the United States. The Company's properties consist of the Huaron and Morococha mines located in Peru, the Alamo Dorado, La Colorada and Dolores mines located in Mexico, the San Vicente mine located in Bolivia and the Manantial Espejo mine located in Argentina. The Company's subsidiaries include Pan American Silver Huaron S.A., Compania Minera Argentum S.A., Minera Corner Bay S.A. de C.V., Plata Panamericana S.A. de C.V. and Minera Argenta S.A.Recent Buy DecisionWhy Silver?
- Silver is a precious metal that is a good value store, similar to gold. Exposure to precious metals is warranted given the current economic outlook. There are plenty of challenges facing the financial and monetary system. It is not a question of 'if', but a question of 'when', the next recession or financial crisis will hit the markets. Once investors face challenges in the financial markets, everybody runs to safe havens such as gold and silver.
Disclosure: I am/we are long PAAS, SLW.