Silver exchange traded funds have regained their luster this year. Along with rallying with its golden counterpart as a safe store of wealth, silver bullion may be strengthening on increased industrial demand while global economies rebound.
Silver and other precious metals enjoyed safe-haven demand as the equities market plunged into a correction. The metal also maintained its momentum as the Federal Reserve lowered its interest rate outlook to only two hikes this year from a previously expected four rate hikes. Additionally, with the dovish Fed stance, the U.S. dollar weakened, which made USD-denominated silver cheaper for foreign buyers and a better store of value for U.S. investors. [Read: Silver ETFs Are Outshining Gold]
Looking ahead, the ongoing negative interest rate environment, with European and Japanese central banks cutting benchmark rates deeper into the red to promote growth, could push investors toward precious metals as a more stable store of wealth. [Read: Low-Rate Environment Will Help Support Gold ETFs]
Moreover, unlike gold, silver sees much higher industrial demand. The precious metal enjoys heavy industrial demand that benefits from an expanding global economy.
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For instance, China’s economy stabilized in the first quarter as its economy expanded 6.7% year-over-year, fueling speculation that industrial demand won’t slow. Over 50% of global demand for silver comes from industries like chemicals, medicine and technological appliances.
“The market has spotted a shiny gem among the stones and is trying to capitalize on the fact that silver historically has very sharp moves,” Tai Wong, the director of commodity products trading at BMO Capital Markets, told Bloomberg. “The rally in base metals is also helping silver specifically, given its significant industrial applications.”
Comex silver futures were up 0.6% Tuesday to $17.1 per ounce.
Investors who are interested in following the silver asset have a number ETF options available.
Silver ETFs and ETN include:
- ETFS Physical Silver Shares ETF (NYSEArca: SIVR)
- iShares Silver Trust ETF (NYSEArca: SLV)
- Powershares DB Silver Fund ETF (NYSEArca: DBS)
- ETRACS CMCI Silver TR ETN (NYSEArca: USV)
Leveraged silver ETFs:
- ProShares Ultra Silver ETF (NYSEArca: AGQ)
- VelocityShares 3x Long Silver ETN (NYSEArca: USLV)
- ProShares UltraShort Silver ETF (NYSEArca: ZSL)
- VelocityShares 3x Inverse Silver ETN (NYSEArca: DSLV)
Silver miner ETFs:
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