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an alternate way to hedge against a drop in silver

PostPosted: Sat Jan 01, 2011 3:44 am
by rainsonme
I stumbled across this article while scanning stocks; HRT is a stock I owned in the past, but not presently; it is profitable, pays a small div, and is apparently inversely tied to the price of silver, due to the high % of silver content in their medical device products.

http://seekingalpha.com/article/239892- ... urce=yahoo

I am not pushing HRT, a risky micro-cap; it is just an example. I bet there are a lot of other businesses who's fortune is inversely tied to the price of silver, due to the high percent of silver they require. If you had a lot tied up in silver, but were worried about a potential correction/crash/dip in silver price, one way to hedge that silver holding might be to buy and hold a company whose fortune would rise if silver dropped. I have never had any luck with puts or inverse ETFs. Holding a profitable company's stock would seem to me a much "safer" way to hedge, if you wanted a hedge. If anyone else knows of other companies that would move inversely to the price of silver, I would be interested in knowing.

Re: an alternate way to hedge against a drop in silver

PostPosted: Sat Jan 01, 2011 5:01 am
by stateofmind
Wrong idea.

Re: an alternate way to hedge against a drop in silver

PostPosted: Sat Jan 01, 2011 5:10 am
by stateofmind
Hm...an idea popped in my head. I think it's similar to what you were getting at. If you could located companies which are less risky(higher market cap, more profitability, low volatility sectors) that could very well be a successful hedge against ownership of silver, while still earning profits derived from profitable business by that company. If you searched for companies in sectors Basic Materials, Tech, and Consumer Goods you could probably find a select few.