The Global X Silvers Miners ETF (NYSEArca: SIL) and the PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF (NYSEArca: SILJ) are two of this year’s best-performing non-leveraged exchange traded funds. In fact, SILJ is this year’s best-performing non-leveraged ETF and that contest is not even close.
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.
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.
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But with silver miners and ETFs such as SIL and SILJ sporting jaw-dropping year-to-date showings, some investors might be concerned that pullbacks are imminent. However, some silver market observers see more upside coming for the miners.
“India and China will need approximately a billion smartphones and tablets by 2020. Demand for silver is expected to remain buoyant and demand will remain ahead of supply,” according to ETF Daily News.
SIL, the largest silver miner-related ETF, tries to mirror the Solactive Global Silver Miners Total Return Index, which is also comprised of global silver miners. SILJ tries to reflect the performance of the ISE Junior Silver (Small Cap Miners/Explorers) Index, which is comprised of silver exploration and mining exposure of small-cap companies, such s Coeur Mining (NYSE: CDE), Pan American Silver (NasdaqGS: PAAS) and First Majestic Silver (NYSE: AG).
Silver 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.
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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.
“The Solar industry is booming, as well. Solar power is taking over conventional power sources, and that is good news for silver as the solar industry is likely to consume more than 13% of the total silver demand in 2016. Similarly, ethylene oxide producers will also consume 25% more silver as compared to the previous year,” according to ETF Daily News.
For more information on the silver market, visit our silver category.
Global X Silver Miners ETF
