The iShares Silver Trust (NYSEArca: SLV) and the ETFS Physical Silver Shares (NYSEArca: SIVR) are each down about 11.7% this year, showings that are far worse than the 10% lost by the SPDR Gold Shares (NYSEArca: GLD).
Investors have previously turned to silver exchange traded funds as an asset with a safe store of value and as a metal with wide industrial application in a growing economy. However, the precious metal is now suffering from a bad turn on both fronts. That means heading into 2016 silver ETF investors face a confounding set of circumstances.
Additionally, unlike gold, silver is used in many industrial applications, but industrial demand is diminishing as global growth, notably China, begins to slow. Industrial demand for silver dipped 0.5% last year on lower demand from Europe and North America.
“We believe that price expectations for gold and silver are too bullish,” says Robin Bhar at French investment and bullion bank Societe Generale, writing about the recent London Bullion Market Association’s precious metals conference in Vienna, and the LBMA attendees’ average price forecasts of $1159 and $18 per ounce for gold and silver one year from now,” reports Bullion Vault.
Technical investors, though, may argue that silver could bounce back over the short-term as the relative strength index, a technical momentum indicator, suggests that SLV is oversold after the selling pressure.