ETF Trends
ETF Trends

Precious metals and their related exchange traded funds (ETFs) are being bought up as worried investors fear the consequences of government spending sprees and looming inflation.

Silver has enjoyed a renaissance of its own, as the price has rallied for the past four weeks. This is the reality of the recession beginning to drive investors to precious metals and tangibles. Silver Investing News reports that silver is outshining gold in the performance category, as it rose four times faster than gold. The gold/silver price ratio is down 7 points in the past month.

  • The ratio tends to narrow in times of financial turmoil. In past recessions, it has hovered around 1:38. Today, it’s around 1:70, nearly twice what it was in the 1980s recession.
  • Silver’s rising price is outpacing gold’s price: silver has increased by 21%, while gold has risen 13%.
  • Motley Fool says that silver offers more potential for the upside than gold and is a good complement to gold exposure.
  • Some predictions have the gold/silver ratio dipping to 1:20 in the current recession.
  • The price ratio isn’t a driving force in the market, but it does impact silver more than it does gold.

As governments devalue currencies to pay for our current financial crisis, speculators have increased demand for precious metals, reports Pham-Duy Nguyen for Bloomberg.

Gold made advances for the third consecutive day as giddy investors in Asia ran for the cover of the metal safe haven. The precious metal is at its highest price since July, as low interest rates and government spending has many on edge, reports Glenys Sim for Bloomberg.

Gold has reached $975 an ounce. The gold ETF, SPDR Gold Shares (GLD), is up 3.3% in the last week and up 14.4% in the last month; up 31.4% over past three months.

ETF GLD performance

UBS AG metals strategists forecast a sustainable price at $1,000 an ounce for gold and maybe even higher gains for this year.

Silver futures for March delivery reached $14.01 an ounce in New York. The silver ETF, iShares Silver Trust (SLV), is up 4.9% in the last week and up 27.7% in the last month; up 52.4% over past three months.

ETF SLV performance

For full disclosure, Tom Lydon’s clients own shares of 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.