As commodities continue to remain attractive, what is driving the increased demand of silver and its exchange traded funds (ETFs)?

Devangi Josji for the Economic Times states that rising industrial usage and a rebound in investment is what is making silver attractive.

  • Silver’s exceptional electric conductivity makes it ideal for use in electronic products and its chemical properties make it useful in the preparation of catalysts.
  • The shiny metal also boasts anti-bacterial properties, which are leading to its increasing use in the medical and water purification industries.
  • Some other industries utilizing silver are food packaging and alternative energy, as silver is used in solar panels.  Additionally, the emergence of RFID, a tagging technology used in supply chain management, is expected to add to the increase in silver’s demand.
  • Many investors are fearful of inflation and are starting to protect themselves and hedge their positions.

When looking at silver, one must also consider supply issues.  Worldwide cuts in mine production of zinc and lead, of which silver is a by-product will definitely stir up supply issues and keep supply down, further making the white metal attractive.

One way to access silver is by looking at the iShares Silver Trust (SLV) up 19.6% year-to-date and above its 200-day moving average.

For more stories on silver, visit our silver category.

Kevin Grewal contributed to this article.

For full disclosure, some of 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.