It is silver’s time to shine as the precious metal’s futures surged Friday, pushing the physically backed silver exchange traded fund over its long-term trend line.
The iShares Silver Trust (NYSEArca: SLV) rose 4.2% Friday and crossed over its 200-day simple moving average. SLV is up 5.5% year-to-date.
Technical analysts point to a strong three-month base forming in silver’s trend line after the 2013 sell-off tested the 2009-2010 resistance level, writes J.C. Parets for The Exchange.
Meanwhile, COMEX silver futures were up 4.9%, trading around $21.4 per ounce.
Silver is gaining support from investors seeking safety in precious metals amid the current market turmoil, reports Ira Iosebashvili for the Wall Street Journal. [Safety Bets Push Silver ETFs to Three-Week High]
Additionally, the weakening U.S. dollar has made dollar-denominated cheaper for foreign investors. The Dollar Index has delcined 1.4% since the end of January, according to Bloomberg data.
“As long as you have concerns about the U.S. economy, there will be capital moving around, and some of it will inevitably find its way into precious metals,” Peter Hug, director of precious metals at Kitco Metals, said in the WSJ article.
Moreover, as silver prices inched higher this year, investors who were betting on a decline were forced to hedge bets by purchasing long contracts, augmenting the rise in precious metals in a so-called short squeeze, Hug added. [Enjoy Silver’s Run While it Lasts]
iShares Silver Trust
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Full disclosure: Tom Lydon’s clients own shares of GLD and SLV.