What a year it has been, and we still have three weeks to go -- so my question here is will 2022 have a silver lining?
Let me explain. I made the mistake this morning of looking back to the end of 2021, and reviewing what is typically my least favorite column of the year: the one where we pick a favorite investment idea for the upcoming year. As a value investor, I fee like a year is sometimes but a day, and I am well aware that some of my ideas take years to work out, so this is always a challenge. In addition, truth be told, not all dumpster-diving ideas end positively.
In 2021, I picked fashion retailer Cato (CATO) , and that one worked out well, with shares up 84%. The prior year's pick, Argentine land and farming name Cresud (CRESY) did not work out so well, and was down 29%.
But this year's pick was based on the idea that silver prices would take off in 2022, fueled by inflation. That selection, closed end fund the Sprott Physical Silver Trust (PSLV) , had a twist, in that shares could actually be exchanged for physical silver. Granted, the minimum redemption is for ten 1,000-ounce bars; at the time, that would have required about 28,035 shares of PSLV, which put redemption off the table for most investors. Still, the notion that redemption was an option was intriguing. In addition, PSLV had a 3% discount to net asset value, which made it an interesting way to obtain silver exposure without buying the physical metal.
Year-to-date, silver has been a huge disappointment, with the spot price down about 1.4%. PSLV is down 6%, and now trades at a 4% discount to the NAV. Yes, that's better than the S&P 500 (down 16%), Russell 2000 (down 18%) and Russell Microcap (down 21%), but certainly not what I expected, and a very hollow victory at this point.
But we still have December to get through, and silver has been rallying a bit over the past several weeks. Silver closed Oct. 14 at $18.43, and is up about 23% since. During that same span, PSLV has risen 18%. We'll see if the "poor-man's gold" can close out the year with a bang, and take PSLV along for the ride.
Meanwhile, I am patiently awaiting the request from my editor to write 2023's top pick...