Silver Mining ETF Enjoys Strong Debut

The second largest holding in SIL is Silver Wheaton(SLW), which accounts for 13.6% of net assets. SLW is listed in the U.S. but has its headquarters in Canada. It operates in many different corners of the globe, with metal purchasing agreements and affiliates across Europe and the Americas.

After SLW, the company taking up the most room in SIL is Pan American Silver (PAAS), which accounts for 12.2% of the fund. Unlike the previous two companies, PAAS focuses solely on silver as opposed to also dabbling in gold. It operates eight mines in South America, with more in development.

The last of the big four in SIL is Industrias Penoles CP, which accounts for 10.8% of the ETF's net assets. The company is a large producer of silver from mines in Mexico, but it also has significant gold, lead, and zinc interests in the country.

Since silver prices tend to be more volatile than gold prices, the silver miners can also be expected to be more volatile than gold miners such as Market Vectors Gold Miners ETF(GDX) and Market Vectors Junior Gold Miners ETF(GDXJ). Additionally, with 50% of assets in the top four holdings, this ETF is more susceptible to company specific risk.

SIL should not be considered a safe-haven investment like gold or silver. Instead it is more of an aggressive play for investors that want to catch a rally in silver prices.

-- Written by Don Dion in Williamstown, Mass.

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