One of the mining companies I follow is Pan American Silver Corp. (PAAS) which is headquarted in Canada. PAAS is engaged in the exploration and development of silver producing properties. Although PAAS does produce gold, zinc, lead and copper, it's main product is silver.
Personally I like silver better than gold as an investment mainly due to industrial demand that gold doesn't have. I've been a buyer of physical silver since it was at 18/oz. I watched it go to near 50/oz and now it's back down to 23/oz. It's definitely not an investment for the faint of heart.
PAAS also just recently increased their dividend by 150%. They now yield close to 4%.
There is a lot of risk with this company. Their cost of silver in the 4th quarter was 21.88/oz which is really close to where silver is currently trading. This is actually lower than some of the other silver producers though. I believe this will put in a floor on the price of silver and would expect silver to bounce back a little.
I bought 150 shares @ 13.28/share. If shares drop under $12 I will be looking to average down again.
I also sold 2 July 20 '13 $14 Puts @ 1.47.
I also sold 2 July 20 '13 $14 Puts @ 1.47.
This trade could turn out a few ways:
1) I hold shares until expiration and shares are trading above $14.00. I will get to keep the $294 in options premiums.
2) I hold shares until expiration and shares are trading below $14.00. I will get assigned 200 shares of PAAS at a cost of $12.53/share. This price also corresponds to a yield of around 4%.
3) Shares of PAAS go on a run and I decide to buy back the put early for a profit less than $294.
I currently have 15 open options positions and a total options profit of $1846 for 2013. My options page has been updated accordingly.
Depending on your entry point, there is probably some good money to be made in precious metals. QE ain't going away and governments hide real inflation numbers - two variables that positively impact the price of gold and silver. I hope it works out for you.
ReplyDeleteAt one time, gold and silver were 25% of my investment portfolio. Since 2010, I've been selling my metals and buying dividend growth stocks as I don't believe in buy and hold for precious metals.
Hi ADY,
DeleteThe precious metals market is really tricky. The paper price is way down but if you watch the cost of bullion, the premiums for silver coins are about 30% higher. There is a shortage of silver but it's not reflected in the paper prices. Delivery on silver eagles in my area is about 4-6 weeks delay. It will be interesting to see how it plays out.
You must have done well if you've been a buyer for several years. You were smart to take profits and buy some DG stocks. I don't want to ever have more than 10% of my portfolio in precious metals.
Thanks for dropping by!