Though they have recently retreated a bit, the iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) remain two of this year’s best-performing commodities exchange traded products and investors seem to be acknowledging as much.
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.
SEE MORE: Analysis – Silver ETFs Are Outshining Gold
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.
As is the case with gold and the corresponding ETFs, investment demand is driving silver prices higher. That increased demand is evident in flows to ETFs such as SIVR and SLV.
[related_stories]“Silver exchange-traded funds had their highest daily inflow since the beginning of July on Monday, according to Commerzbank, sending holdings to a record high of 20,670 tons. Holdings in gold-backed ETFs reached 2,270.5 tons at the end of July, the highest level since May 2013, according to the World Gold Council,” reports Stephanie Yang for the Wall Street Journal.
Year-to-date, investors have allocated nearly $747 million in new money to SLV while SIVR has seen inflows of almost $20 million.
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.
Related: Silver Miners ETFs Can Keep Soaring
Silver enjoys heavy industrial demand – about 56% of total demand for silver comes out of industrial fabrication, followed by jewelry 20%, coins & bars 18% and silverware 6%. Nevertheless, silver remains correlated to gold’s fortunes.
“Bullish positions on silver and gold have pulled back in recent weeks, but remain near record highs, according to data from the Commodity Futures Trading Commission,” reports the Journal.
For more information on the silver market, visit our silver category.
ETFS Physical Silver Shares
