Any seasoned silver investor will tell you that silver mining stocks can leverage the price of silver. Pick the right company and it will leverage the silver price increase multiple times. But which ones should you choose to invest in? The potential leverage can work both ways as the money invested in a stock disappears faster than the corresponding drop in the silver price.

Moreover, leverage carries risk and so while one will wisely only commit a percentage of their investment capital to any one company, allocations to other companies could perform badly and eat into the returns of the successful ones.

One useful tool is a quick reference table that measures the leverage that popular silver mining stocks deliver over silver. Note this is not the same as a silver stock making healthy gains. For example, if a stock gains 10% over a certain time period, you may think this is something worth investing in. However, if silver also gained 10% in the same period, nothing has been gained and you were better off just owning silver bullion or an ETF without the risks that come with owning part of a company.

But if the stock had gained 20%, then its leverage over silver was 20/10 or a factor of 2. Clearly, you were getting some good leverage and higher paper profits by holding shares in this company. In contrast to this, one may also find stocks which only gained 5% and thus provide a "negative" leverage of 5/10 or 0.5.

That table of leverage rankings and its regular updates are reserved for subscribers, but it was a curious exercise to apply this in reverse to the bear market in both silver and mining stocks that has ruled for over four years. Which silver stocks weathered the storm better than others between April 2011 and October 2015? An extract of that table for some popular stocks is shown below where "Oct 1st" and "Oct 15th" columns give their rankings on a scale from 1 to 30 for those successive dates.

So, for example, Fortuna Silver Mines (FVI.TO) ranked fourth and had a positive 2.62 leverage over silver during the bear market. What that means is that while silver dropped nearly 70% during this period, Fortuna "only" dropped 27% and so deleveraged the drop in silver's price by a factor of 2.62. Clearly, the stock was still not worth holding, but the principle of leveraging works both ways and this stock demonstrates that it was not the case that if a stock doubles your gains on the way up, it must double your losses on the way down.

On the flip side, a leverage factor of one means the stock performed as badly as silver. So anything below one means the stock performed even worse than silver during the 2011-2015 bear. Here is a selection of the worst performers for that period. We find that the Golden Minerals Company was bottom of the heap while companies such as Silvercorp Metals (SVM.TO) were not that far behind.

Note that individual stock rankings fluctuated between the two October dates. This is not surprising and highlights the importance of tracking such rankings over a period of time to ensure we have a winning stock and not a flash in the pan.

Further analysis of silver can be had by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain subscription details for the Silver Analyst newsletter. Comments and questions are also invited via email to silveranalysis@yahoo.co.uk.