**Editor's Note: Wealth Daily has just released a more up-to-date and extensive resource oage on silver stocks for your reading pleasure.
The price of gold reached an all-time high of nearly $1,610 an ounce this week as new buyers continue to stream into the market, seeking safe haven from the U.S. dollar and a shaky global economy.
Data from the U.S. Commodity Futures Trading Commission (CFTC) continues to show a surge in gold buying from large financial institutions and money managers, despite record prices.
But while gold continues to shine in the limelight, silver has been the real moneymaker...
The price of silver has surged over 50% since the beginning of the year, making it the single best performing major commodity of 2011 so far.
|Metals||Year-to-Date Performance||Other Commodities||Year-to-Date Performance|
|Copper||-0.25%||U.S. Dollar Index||-5.20%|
Silver has been the top-performing commodity, virtually blowing everything else out of the water...
So it may come as a surprise that some silver stocks have lagged.
Take look at the Global X Silver Miners ETF (NYSE: SIL), which lists 25 of the world's top silver mining companies. For the year, SIL is virtually flat.
Despite a 50% gain in silver bullion prices, the world's top 25 silver miners (as per their listing in SIL) haven't moved but only slightly higher.
There's a reason for this: The majority of silver that is mined around the world is produced as a by-product of another metal or group of metals. These frequently include gold, copper, lead, and zinc. Only about 20% of the world's silver comes from mines where silver is the primary metal, which means producers are often subject to price volatility among others metals.
Sometimes, this can be beneficial for the company; other times, it is not. And while the price of gold has been steadily increasing over the past few months, base metal prices remain relatively flat, dragging down on producers a bit.
There are other types of silver producers that we refer to as “primary” silver companies. A primary silver company is one that generates more than 50% of its revenue from the production and sale of silver.
With silver outperforming all other metals, primary silver companies have been leading the pack in stock gains over the past several weeks.
Take First Majestic Silver (NYSE: AG), for example...
First Majestic Silver is one of the purest silver plays on the market. The company owns and operates three primary silver mines in Mexico: La Parrilla, San Martin, and La Encantada.
Shares of AG have risen more than 60% for the year.
First Majestic generates 85% of its revenue through the production and sale of silver. The rest of the company's revenue is generated through gold, lead, and zinc.
First Majestic expects to increase total silver output from its operations to 7.5 million ounces of silver in 2011, and up to 16.0 million ounces by 2014.
Here are two more primary silver companies that should be set to continue doing very well with rising silver prices...
Pan American Silver (NASDAQ: PAAS) is one of the world's largest primary silver producers.
Revenue by Metal
Pan American has seven operating mines in Mexico, Peru, Argentina, and Bolivia. Last year was the company's fifteenth consecutive year of silver production growth, with a record 24.3 million ounces of silver produced.
In 2011, Pan American expects to produce 24.0 million ounces of silver and 78,000 ounces of gold.
Silver Standard (NASDAQ: SSRI) has the largest in-ground silver resource of any publicly-traded primary silver company, with a pipeline of 15 projects ranging from grassroots exploration to production in Argentina, Peru, Mexico, Canada, Chile, the United States, and Australia.
|Revenue by Metal
Silver Standard expects to produce a total of 8.5 million ounces of silver in 2011.
Alternatives to Primary Silver Stocks
The obvious (and best) alternative to investing in primary silver stocks is to invest in the physical metal itself.
Owning physical silver is easy and affordable. Investors can choose among a wide variety of physical bullion options from both private and government minters.
Other good alternatives to investing in primary silver stocks include silver ETFs like the iShares Silver Trust Fund (NYSE: SLV). Silver royalty and streaming companies, like Silver Wheaton Corp (NYSE: SLW), also make good alternatives to silver mining stocks.
Analyst, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits