Analysis: Silver ETFs Are Outshining Gold

The outperformance in the precious metals commodities have also bolstered silver miner-related ETFs, which are among the best peforming ETFs of the year. For example, the Global X Silvers Miners ETF (NYSEArca: SIL) increased 65.4%, PureFunds ISE Junior Silver ETF (NYSEArca: SILJ) surged 118.5% and iShares MSCI Global Silver Miners ETF (NYSEArca: SLVP) jumped 72.8% year-to-date. In comparison, the Market Vectors Gold Miners ETF (NYSEArca: GDX), the largest gold miner-related ETF, gained 61.7% this year.


SIL tracks the Solactive Global Silver Miners Total Return Index, which is comprised of global silver miners. The ETF is top heavy with a hefty 11.9% tilt toward Tahoe Resources (NYSE: TAHO), 11.2% Fresnillo Plc, 10.8% Silver Wheaton Corp (NYSE: SLW) and 8.2% Industrials Penoles among its top holdings. The fund’s country weights include Canada 48.1%, Mexico 23.1%, U.S. 21.7%, Russia 5.7% and Peru 1.5%.

SLVP reflects the performance of the MSCI ACWI Select Silver Miners Investable Market Index, which also has a large 62.6% position in Canadian companies, along with 13.1% in U.S., 11.7% U.K., 5.0% Peru, 4.5% Mexico and 2.0% Hong Kong. The fund’s top holdings include a big 18.2% weight in SLW, along with 9.1% Fresnillo and 8.3% TAHO.

SILJ, on the other hand, follows the ISE Junior Silver Index, which is comprised of small-cap miners and explorers, with a heavy 88.3% emphasis on Canadian companies, along with 6.7% U.S. and 4.9% U.K. Top holdings include First Majestic Silver (NYSE: AG) 16.4%, Pan American Silver Corp (NasdaqGS: PAAS) 11.6%, Mag Silver Corp 10.7% and Coeur Mining (NYSE: CDE) 5.8%.

These silver miner ETFs may also be enjoying a double boost from the shifting foreign exchange markets. Silver bullion prices are affected by a weakening U.S., and the global silver ETFs also enjoy the positive forex effects of a depreciating greenback – a strengthening foreign currency means that returns are augmented when converted to a weaker U.S. dollar. However, potential investors should be aware that a strengthening dollar could contribute to a significant pullback in both precious metals and related miner assets.

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Full disclosure: Tom Lydon’s clients own shares of SLV, GLD and GDX.