This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Silver-Mining ETF Emerges as Latest Niche

NEW YORK ( TheStreet) -- Mining stocks got support as GlobalX Funds started selling the GlobalX Silver Miners ETF (SIL).

It's the latest in a flurry of mining-stock exchange traded funds, which include the Market Vectors Junior Gold Miners ETF (GDXJ) and the First Trust ISE Global Copper Index Fund (CU). GlobalX also has a new copper fund with its Copper Miners ETF (COPX). The company has the silver category all to itself for now.

Canada accounts for 58% of the ETF, Mexico, 24%, the U.S., 10%, and Russia and Peru, 4% each. Many of the Canada-based companies have much of their operations in South or Central America.

An ETF focusing on one type of metal will have concentrated holdings, as is the case with the Silver Miners ETF. Four of the 25 stocks account for 48% of GlobalX Silver Miners ETF. As such, it's important to know about the larger holdings. Industrias Penoles is from Mexico; Pan American Silver (PAAS - Get Report) keeps its headquarters in Canada but has mining operations in Peru, Mexico, Argentina and Bolivia; Silver Wheaton (SLW - Get Report) isn't a miner at all -- it buys silver from mines where the metal is produced as a byproduct; and Fresnillo, also a Mexican company.

While GlobalX Silver Miners ETF has concentrated holdings, it's still less risky than owning a single silver stock. The ETF is for investors who want to own a niche segment without picking stocks in a very volatile part of the market.

Silver-mining stocks are, indeed, very volatile. That can be a good thing or a bad thing. For perspective, the MSCI Canada Index has an annualized standard deviation of 25 versus 49 for the index underlying the GlobalX Silver Miners ETF. The materials sector has a 3.4% weighting in the S&P 500 Index, so investors wanting to add exposure to miners ought to take that into account. A 10% weighting would be a huge bet that would increase volatility dramatically. A 5% weighting would add a lot of return without causing overwhelming anguish in a down market.

The ETF could serve as an emerging-markets proxy, given how many of the miners are based in developing countries. The charts for some of the larger holdings in the fund are similar to the iShares MSCI Emerging Markets Fund (EEM), which allocates 28% to resource stocks.
At the time of publication, Roger Nusbaum had no holdings in the securities mentioned.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
COPX $10.34 0.00%
SIL $22.14 0.00%
CU $8.88 3.14%
EEM $29.32 0.00%
GDXJ $24.91 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs