Commodity exchange traded funds have experienced outflows so far in the second quarter, while precious metals such as silver and gold have contributed to the sector’s volatility. Although volatility levels are higher than usual, some experts say the long-term trends for precious metals remain set in place.
Is a commodities bubble about to burst? Analysts say no, but Michael Kahn for Barron’s reports that the easy money in selling silver and gold has already been made. “Western gold demand is growing as the economies remain weak, but Asian demand is surging as GDP grows,” said BullionVault’s head of research, Adrian Ash. “Together, this keeps creating the perfect storm for short-term pricing.”
The iShares Silver Trust (NYSEArca: SLV) has pulled back 27% from its April 28 closing high of $47.26, said David Chojnacki, a market technician at Street One Financial, in research prepared for ETF Trends. If the silver fund cannot penetrate above the trend line which sits just above $35 a share, then it will likely retest support. [Mapping Out Silver ETFs Next Possible Moves.]
SPDR Gold Shares (NYSEArca: GLD) has been steady with gold trading around $1,500 an ounce after its recent sell-off. SPDR Gold Shares has seen nearly $1 billion in outflows so far this month, an analyst said. [Gold ETFs Saw $2.5 Billion Outflow In First Quarter.] The strength in the U.S. employment picture has pulled on gold’s price for now, reports Tatyana Chumsky for The Wall Street Journal.
While the interest in physical silver and gold ETFs remains softer, the uncertainty of the U.S. economy’s inflationary picture and strength or weakness in the greenback are keeping investors’ appetite for precious metals healthy.
iShares Silver Trust
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own SLV and GLD.