Bucking what had until today been a downtrend, silver exchange traded funds (ETFs) of all varieties have suddenly become upwardly mobile. What gives?
In the last month, silver ETFs have lost anywhere from 8%, in the case of physically-backed funds like iShares Silver Trust (NYSEArca: SLV) to 15%, in the case of Global X Silver Miners (NYSEArca: SIL).
Today, however, silver ETFs are up as much as 4%. It’s a nice turnaround from the drop, which also saw silver ETFs lost nearly 2% of their silver holdings as investors sold them off.
The moves can be attributed in part to the Federal Reserve’s plan to keep the $600 billion bond-buying program in place through June.
Silver ETFs were also delivered an assist by a broader decline in the markets this morning after Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) came back with disappointing fourth-quarter earnings.
Is this the start of a long-term uptrend? It could be. Silver is a bit of a chameleon: it’s a safe-haven metal in times of turmoil, which is part of what we’re seeing today, but in times of economic prosperity, it benefits from being an industrial metal. Industrial applications account for half of silver’s demand.
Analysts say that Asia is the biggest demand driver for silver; China’s demand for the metal has more than doubled in the last 10 years and became a net importer in 2007.
You’ve got several options for investing in silver. Physically-backed ETFs offer the most direct exposure to prices. In addition to SLV, ETFS Physical Silver (NYSEArca: SIVR) is the other physical play.
Futures contracts exposure can be had in PowerShares DB Silver (NYSEArca: DBS).
Leveraged and inverse ETFs will maximize silver’s moves in either direction. Whether you’re bullish or bearish on the metal, choose accordingly between ProShares Ultra Silver (NYSEArca: AGQ) and ProShares UltraShort Silver (NYSEArca: ZSL).
And lastly are the miners. Global X’s SIL owns a basket of companies that produce and mine for silver. Analysts are seemingly most bullish on this segment of the silver market, since high prices often spell nice profit margins for miners.
Whether this is a long-term uptrend or just a short blip to the upside, we suggest watching the trend lines to see what’s next for silver. Silver has just topped its 100-day moving average, so if you missed the ride the first time around, this could be your entry point.
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