The Top Ten Silver Investments of 2009

It was a great year for silver investors, though not as great as many had hoped or expected. There are so many factors pointing to a much higher value for silver than was realized in 2009, but look on the bright side: so long as governments, central banks, and short-selling speculators artificially keep the price of silver down, they’re effectively subsidizing your silver purchases. The only time we should be excited about higher silver prices is when we’re ready to sell, and I, for one, am still in the accumulation stage.

That said, I can’t exactly be mad when the spot price of silver goes up. It feels good to be right, and no matter what vehicle you chose for silver investing in 2009—silver stocks, ETFs, or actual bullion—you couldn’t lose. Here is a list of the ten best silver-related investments for the year, from Christmas 2008 through Christmas 2009.

1. Silver Bullion
Although silver bullion did not see the price appreciation of the more heavily leveraged silver stocks, it was and will always be the best silver investment you can make. That’s because paper gains in the stock market can be wiped out in a flash, but so long as you hold real, physical silver, your investment is always protected. When considering the “best” investment, you have to look at risk as well as reward.

Silver hit a low in January of ’09 at $10.51 an ounce—this was the optimal time to buy. Its high point came in early December at $19.18—an 82.4% gain—but in my opinion, this was no time to sell. Personally, I think I’m being modest when I call for a per-ounce price of $50 or more within the next 2-3 years.

Now, you could have made more money buying most silver stocks in 2009, but if you’re trading stocks, the question is: what do you do with your profits? Do you roll them back into more stock investments? Do you just sit on top of the cash? Under the former, you run the risk of having things go against you and wiping out your profits. Under the latter, you’re guaranteed to lose purchasing power through the continuing devaluation of the dollar. My advice: go ahead and trade stocks if you have a knack for it, but when you take profits, buy silver bullion!

2. Hecla Mining Company (Ticker: HL)
Although Hecla ranked as the fourth worst-managed gold and silver company in an earlier article, there’s no contesting the stock’s stellar performance in 2009. Over the past fifty-two weeks, through Christmas, shares of HL are up 161.69%. If you were a really savvy trader who bought at the stock’s low ($1.17 on March 10) and sold at its high ($7.47 on December 2), you could have racked up a 538.46% gain—that could have bought a lot of silver.

As for the stock’s 2010 forecast, I don’t expect it to so greatly outperform its peers. The firm is about to post a second straight annual loss in 2009, and though it may have been drastically undervalued at $1.17, it would have to fall a lot lower than its current $6.49 before it would look like a good buy to me.

3. Endeavour Silver Corporation (Ticker: EXK)
From Christmas to Christmas, Endeavour Silver Corporation was the best-performing silver stock of all, racking up gains of 263.21%. From its low at $0.94 on New Year’s Eve of 2008, to its high of $4.16 on December 18 of ’09, Endeavour Silver skyrocketed by 342.55%.

Endeavour’s outlook for 2010 is much more promising that that of Hecla Mining, based in large part on its far superior management. In addition to its stellar stock performance, Endeavour has also grown sales by a compound rate of 45% over the past three years. That sort of thing points to sustainable growth, and thus EXK is one of my favorite silver stocks for 2010 and beyond.

4. Silver Wheaton Corporation (Ticker: SLW)
Silver Wheaton is a unique silver stock in that it doesn’t mine silver. Instead, the firm obtains it through long-term purchase contracts. This way, shares of SLW are a pretty good proxy to actual silver bullion—probably a better “pure play” on silver than a silver ETF, for example. And yet, Silver Wheaton greatly outperformed bullion in ’09, gaining 152.04% year-over-year and 257.58% from its low ($4.88 on January 15) to its high ($17.45 on December 2).

Since Silver Wheaton tries to peg itself to the spot price of silver, actual silver should be preferable to its shares in most cases. However, if you have an IRA or even a regular stock-market account with idle money in it, Silver Wheaton could be an easier way to invest those funds in silver than the generally preferable alternatives. The stock’s outlook for 2009 is just as bullish as that of silver itself.

5. Coeur d’Alene Mines Corporation (Ticker: CDE)
Coeur d’Alene Mines explores for and produces silver (and gold) in the Silver Valley mine of Idaho and the Rochester mine in Nevada, as well as two mines in Chile and Argentina. The firm is also developing mines in Bolivia and Alaska.

Year-over-year, Coeur d’Alene’s shares more than doubled, and from its low point ($5.50 on March 1) to its high ($24.86 on October 21) there’s a spread of 352%. Coeur d’Alene Mines has come off of its highs by quite a bit recently, closing on Christmas Eve at $18.58. It looks to be a solid investment for 2010.

6. Mines Management, Inc. (Ticker: MGN)
Mines Management, Inc. was rated the #1 best-managed precious-metal company, but it ranks just #6 among the best-performing silver stocks. Year-over-year, the stock is up 91.09% through Christmas, and 239.89% from its low ($1.03 on January 23) to its high ($3.47 on December 2). On Christmas Eve, it closed at $3.08 per share.

7. Buenaventura Mining Company Inc. (Ticker: BVN)
Buenaventura Mining Company, aka Compania de Minas Buenaventura (as it’s known in Peru), saw its shares range from $14 (January 15) to $42.69 (December 1)—a span of 204.93%. Year-over-year, though, shares are “only” up 82.5%.

8. Pan American Silver Corporation (Ticker: PAAS)
Pan American Silver is a mining company operating primarily in Mexico and Peru. It also sells the byproducts from its silver mining operations, including zinc, lead, copper, and gold. From its low point of $12.61 to its high of $27.31, shares of PAAS gained 116.57%.

9. Silver Standard Resources Inc. (Ticker: SSRI)
Silver Standard Resources ranks as the worst-managed silver stock on our list—or in general—but it still managed to post the ninth-best performance, year-over-year. For the fifty-two weeks ending on Christmas, shares of SSRI are up 50.8%. If you bought SSRI at the optimal time (at $11.65 on March 10) and sold it at its high ($25.60 on June 1), you would have realized a 119.74% gain in less than three months. That’s not bad, for sure, but while every other stock had its 52-week high in October or later (all but one were in December), SSRI peaked way too early.

10. MAG Silver Corporation (Ticker: MVG)
MAG Silver was ranked the sixth-worst-managed gold and silver company, and one of the reasons is that its performance lagged. Year-over-year, shares of MVG gained only 34.66%—that’s far less than silver itself. Why take the risk of buying stocks when you can hold the real stuff? Only trade in pursuit of short-term profits, which can then be converted to silver. For longer-term investing, stocks are only a good idea if there are extenuating circumstances (i.e., your employer matches contributions to your 401k). Whenever possible, though, it’s always best to hold actual silver bullion.