Some of the shine has recently come off the silver trade as the iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) have pulled back in recent weeks. However, those silver exchange traded funds are still among this year’s best-performing commodities funds, prompting some commodities market observers to view silver’s recent pullback as a buying opportunity.
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_stories]
Silver prices touched two-year highs earlier this month. Traders looking to profit from silvers downside can consider the ProShares UltraShort Silver ETF (NYSEArca: ZSL), which is a double-leveraged product.
Year-to-date, silver has mirrored the surge in gold in response to ongoing market volatility. Silver has exhibited a correlation of over 80% to gold and typically moves in the same direction as the yellow metal but in larger movements.
“It’s very difficult to be bearish on precious metals — especially silver, which has drawn particular interest from investors this year. With so much pricing momentum, and so many geopolitical and market factors blowing in its sails, there’s no reason to think silver won’t continue to post gains through the end of the year,” according to ETF Daily News.
Looking ahead, the quickly expanding photovoltaic panel or solar industry could continue to drive silver demand. Installations and investment in solar panels, which incorporate silver for its electrical conductivity, are at record levels, reports Henry Sanderson for the Financial Times.
According to Thompson Reuters GFMS, the solar industry’s silver demand increased 23% last year, the second consecutive year of increases.
“Brexit, oil meltdown, global central banking policy, and a whole lot of uncertainty surrounding November’s presidential election could easily push the price of silver not just about $20 an ounce in the near term — how about $30?,” notes ETF Daily News.
iShares Silver Trust