Plenty of gold and silver exchange traded funds were in focus on Thursday with miners ETFs shining particularly bright.
Of the top-15 ETFs in terms of percentage gains yesterday, nine were precious metals miners funds, a group that was topped by the PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF (NYSEArca: SILJ).
Highlighting its status as an alternative to leveraged silver ETFs, SILJ surged 10.4% on triple its average daily turnover, meaning SILJ’s Thursday gain was more than double those of the iShares Silver Trust (NYSEArca: SLV) and the ETFS Physical Silver Shares (NYSEArca: SIVR). Impressively, SILJ also topped the double-leveraged ProShares Ultra Silver (NYSEArca: AGQ) by about 130 basis points on the day. [Silver Miners Leading Metals ETF Rally]
SILJ is not yet a household name among equity-based commodities ETFs, but the recent volume surge in the fund could be a sign more trading desks are taking note of the fund.
“SILJ for example, most portfolio managers, even those involved in the ETF managed space would have responded “I have never heard of it” or at the very least “it’s too small for me to trade in size” before the outsized move we have seen in the past couple sessions in tandem with rising Silver prices,” said Street One Financial Vice President Paul Weisbruch.
As has been seen with gold futures and miners ETFs this year, SILJ does share an intimate correlation to silver’s price action. That is to say it is not reasonable to expect SILJ to go on a tear if silver futures are falling. However, SILJ is proving that when silver rips higher, SILJ can often positively overshoot the metal’s move.
It is that positive leverage to rising silver prices that helps SILJ join a long list of small ETFs that have delivered outsized performance. [Small-ETFs With Big Returns]
“Part of what we do is not only analysis and helping managers to access tangible and timely trade ideas, but also to add liquidity in your prototypical ‘low volume’ ETF products so that managers are already “in” the product before it perhaps has its day in the sun. SILJ for example in the past few sessions has traded more than 3X its normal trading volume and is hitting new ‘radars’ on a daily basis now thanks to the uptick in activity. We doubt it will remain a ‘small’ and under-covered fund for long,” adds Weisbruch.
In confirmation of SILJ’s potency relative to its large-cap counterparts, the ETF’s 33.4% June gain is well in excess of the average June pop of 21.5% for the Global X Silvers Miners ETF (NYSEARca: SIL) and the iShares MSCI Global Silver Miners ETF (NYSEArca: SLVP).
That spread is slightly wider than the June gap between the Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) and the Market Vectors Gold Miners ETF (NYSEArca: GDX). GDXJ is up 27.6% this month while GDX is higher by 16.5%.
PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF
Tom Lydon’s clients own shares of SLV.