The iShares Silver Trust (NYSEArca: SLV) and the ETFS Physical Silver Shares (NYSEArca: SIVR) are down 26% this year, performances that are far worse than the dismal 19.9% lost by the SPDR Gold Shares (NYSEArca: GLD).
To its credit, silver has been outperforming gold this month. Since the start of October, SLV and SIVR are up 6.2%, nearly 50% more than GLD has returned over the same time. Importantly, silver’s October run has put SLV and SIVR in positive technical positions. [Silver ETF Slams Gold Rivals]
SLV has notched a series of closes above a downtrend line that dates back to February. “For the first time in 2013, SLV is closing above a falling resistance line and smart money traders are positioned for a rally,” notes technical analyst Chris Kimble.
Commitment of traders data indicate professional speculators and other large-scale market participants are positioned for a silver rally. On a related, noteworthy is the fact that in a year in which two gold ETFs rank among the year’s 10 worst funds in terms of outflows, investors have poured $424 million into SLV. Even the Global X Silver Miners ETF (NYSEArca: SIL) has net inflows on the year.
Patient investors may be positioning for a sequel to silver’s go-go days seen a few years ago. Earlier this month, CPM Group, a commodities research, consulting, financial advisory, asset management, and commodities management firm, revealed a bullish long-term forecast on silver. [Silver ETFs Could Shine for Long-Term Investors]
Embattled silver could start another ascent over the next decade, “continuing a secular bull trend that began at the turn of the century,” said CPM in a report.
Trading just over $22, SLV is still more than 50% below its all-time high.
iShares Silver Trust
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD and SLV.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.