ETF Trends
ETF Trends

Silver exchange traded funds (ETFs) have been outshining gold lately as the precious metals’ price ratio has fallen to the lowest level in 27 years, according to an industry report.

The gold-to-silver price ratio has dropped below 40 to its lowest reading since the 1980s.

“Silver prices hit their highest level in over three decades, and have seen more than triple the returns of gold over the past week, as markets have become more sanguine about the impact of Japan’s earthquake on global growth and industrial demand for silver,” ETF Securities said in a March 29 newsletter.

“Further declines in the [gold-to-silver price] ratio are likely heavily dependent on the continued health of the global industrial recovery given that around 40% of silver’s annual demand is from the industrial sector vs. around 11% for gold,” according to the weekly newsletter.

The $13.4 billion iShares Silver Trust (NYSEArca: SLV) was up 21% so far this year through March 29, while SPDR Gold Shares (NYSEArca: GLD) was flat, according to Morningstar. [Are Silver ETFs Shining Too Brightly?]

ETFS Physical Silver Shares (NYSEArca: SIVR) is another large ETF that invests in silver, while Global X Silver Miners ETF (NYSEArca: SIL) tracks miner shares.

Silver and gold ETFs are both near record highs, even though “poor man’s gold” has outperformed the real thing in percentage terms lately.

“Spreading Middle East and North Africa unrest has increased concerns about worst case scenarios and the impact higher oil prices may have on inflation and growth, driving up demand for risk and inflation hedges,” ETF Securities noted. “European debt concerns are also on the rise.”

For full disclosure, Tom Lydon’s clients own SLV and GLD.

The opinions and forecasts expressed herein are solely those of John Spence, 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.