Silver ETFs Might be due for Pullbacks

The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) are among this year’s best-performing commodities exchange traded products, but with investors looking for safer assets following the Brexit outcome, some commodities market observers see silver as ripe for a near-term retreat.

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.

Related: Analysis: Silver ETFs Are Outshining Gold

Both SLV and SIVR are bullion-backed silver ETFs – the funds’ shares represent a physical holding in silver bars stored in London, U.K. bank vaults. Potential investors should be aware that physically backed ETFs are taxed as collectibles at a rate of 28% instead of long-term equity rate of 15%.

On Monday, “we noted that a push higher would likely be difficult for the metal given resistance between the 17.80s and 18.00 vicinity. As it turned out, the third lower high was created at 17.86 before shoving back lower,” reports DailyFX. “It might not turn into a rout, but a clean undercut into the upper 17.50s on the hourly should lead to near-term weakness towards 17.30/25. If selling becomes aggressive then a move could develop into strong support between 17.07 and 17.13.”


Looking ahead, total global installed photovoltaic power capacity is projected to increase by about 150% to 605 gigawatts by 2020, according to Bloomberg New Energy Finance.