Precious metals are recovering after the sell-off in late 2011, with silver and related exchange traded funds taking the lead.
The iShares Silver Trust (NYSEArca: SLV), PowerShares DB Silver Fund (NYSEArca: DBS) and ETFS Physical Silver Shares (NYSEArca: SIVR) are all up about 20% year-to-date.
Silver price gains outpaced other precious metals, increasing almost 20% in January for its largest monthly rally in nine months, reports Amanda Cooper for Reuters. [Silver ETFs Shine as 50-Day Average Recaptured]
In comparison, gold futures rose 11% in January, which are still the highest January gold price gains since 1980 and the largest one-month gain since August. SPDR Gold Shares (NYSEArca: GLD) is up 11.4% year-to-date.
There are still a couple of macroeconomic factors that are in silver’s favor, Martin Denholm writes for Wall Street Daily. [What’s in Store for Silver ETFs?]
Interest rates in developed and emerging markets remain extremely low, leading to weaker currencies and pushing investors toward precious metals viewed as a better store of wealth.
Developed economies are also struggling to generate economic growth. During times of economic uncertainty, precious metals like silver can provide refuge from market volatility.
Additionally, with the Eurozone and U.S. tackling the debt crisis contagion, if investors begin to feel that both the U.S. dollar and euro will fall victim to financial problems again, precious metals will begin to attract safe-haven investments.
Lastly, as the global manufacturing numbers improve, demand for silver in industrial applications will also begin to rise.
iShares Silver Trust
For more information on silver, visit our silver category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD and SLV.