Silver ETF Slams GLD Over Past Two Months

October 7th at 2:11pm by Tom Lydon

Silver prices, along with related exchange traded funds, are outshining gold as uncertainty fuels safe-haven investments, but industrial activity could help silver keep up its momentum.

The iShares Silver Trust (NYSEArca: SLV) rose 2.9% Friday while the SPDR Gold Shares (NYSEArca: GLD) gained 1.1%. Since the early August low, SLV has increased 14.4%, whereas GLD is only up 3.2%.

Precious metals are strengthening as a safe-store of value, with Congress deadlocked over extending the country’s debt limit to avoid a default.

“Gold is getting some bids because of the uncertainty,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a Bloomberg article. “It will be a very big deal if the U.S. defaults.”

Gold futures were up 1.1% Monday, trading around $1,324.6 per ounce. Silver futures were up 2.7%, trading around $22.35 per ounce. [Gold ETFs Pick Up After Touching Two-Month Low]

However, over the mid-term, silver could outperform gold as the U.S. monetary policy normalizes, Shanghai Metals Market reports.

According to Bank of America Merrill Lynch, gold will weaken along with a gradual rise in interest rates, with bullion hovering around $1,300 per ounce in the fourth quarter and dropping to $1,294 an ounce next year.

The bank, though, anticipates silver prices to average $26.38 an ounce due to increased economic activity, which would support silver for industrial applications.

iShares Silver Trust

For more information on gold or silver, visit our precious metals category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own 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.

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