Beleaguered precious metals need more than just a change of the calendar to regain their lost mojo, but those looking to be long silver exchange traded funds would do well to consider the white metal’s seasonality.
After the iShares Silver Trust (NYSEArca: SLV) and the ETFS Physical Silver Shares (NYSEArca: SIVR) each plummeted by more than 36% last year, favorable seasonal factors could provide a much-needed near-term boost. [Silver’s Popularity a Big Contrast to Gold’s Fall]
“The strongest time of year for the price of silver has been from Dec. 23 to Feb. 28. Over the past 20 years, the metal has gained an average of 9.05 per cent with positive results recorded in 14 of the past 20 periods. Gains are prominent during the first two months of the year when equity market volatility is heightened, resulting in outperformance versus the S&P 500 averaging 8.65 per cent. The metal posted gains stronger than equity market returns in 16 of the past 20 periods,” write Don and Jon Vialoux for the Glove and Mail.
Silver ETFs already appear to be obeying that seasonality. Over the past week, SLV, the largest silver ETF by assets, is higher by 2.4%.
Recent strength in silver ETFs provides some relief to investors that have faithfully stuck by the white metal despite plunging gold prices. Despite two gold fundss ranking among the 10 worst ETFs in terms of 2013 outflows, SLV actually garnered $81.1 million worth of inflows last year.
“A move above $20.48 will complete an intermediate base-building pattern implying upside potential to $22. Short-term momentum indicators including Stochastics, Relative Strength Index (RSI), and Moving Average Convergence/Divergence (MACD) are trending higher. Strength relative to the S&P 500 index is starting to become evident,” according to the Globe and Mail.