How to Invest in Silver Stocks
Silver stocks, like all commodity stocks, move with the price of the underlying commodity. When silver prices are going higher, silver stocks are expected to benefit because higher prices, combined with fixed production costs, will eventually result in higher profits.
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Instructions
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Use a free online stock screener to compile a list of silver stocks. You may limit your choices to a particular price range or listing, such as NYSE or NASDAQ. Generally, the lower the price and the smaller the capitalization, the more a stock can move in either direction.
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Exercise discretion when evaluating current profitability. When prices are low, only the lowest cost producers remain profitable. The rest are losing money and/or curtailing their prospecting and production. As prices rise, more companies become profitable and expand their production and prospecting. There may be companies that are currently unprofitable but expect to show a profit in the next quarter or two. Dig for those.
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Follow the price of silver. You must understand the silver market in order to profit from silver stocks. Because prices never move in a straight line, it's important to make sure that silver is in a bull market before considering silver stocks.
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Use charts to determine buy and sell points. If you have ever read a periodic update from a mining company, you know that it contains pages of technical data on current production and prospecting at various mines. It takes a real expert to make head or tail of such a report. Few investors can make sound buy/sell decisions based on that information. Charts are a shortcut as they show investor action following those reports. Let others analyze them and simply follow in their footsteps.
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