“Investing in silver is not a priority for everyone, but it has its uses in a dollar-based portfolio. Silver can retain its purchasing power under strong inflationary pressure,” Morningstar analyst Abraham Bailin wrote in a profile of a silver ETF. “Governments have historically been lousy stewards of the value of their currencies, and a precious-metals position can help hedge a portfolio against such losses.”
He wrote a small position in precious metals such as silver could be considered an insurance policy if the Fed eases further.
“In comparison with gold, silver is not a perfect substitute. Silver’s industrial uses make it a much more diluted ‘safe haven’ asset than gold and a less effective hedge against inflation,” the analyst wrote.
Some precious metals ETFs are backed by physical metal, while others buy futures contracts.
ETFS Physical Silver Shares
Full disclosure: Tom Lydon’s clients own SLV.