Analyzing Why Silver ETFs Can Keep Rallying

After struggling in the latter stages of 2016, silver, the iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR) are rebounding a bit this year. The two silver exchange traded products are both up more than 7% to start the new year.

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.

The Federal Reserve is targeting three interest rate hikes this year, which could white on precious metals, but some market observers believe there is upside to be had with the white metal.

There are some indicators that point to favorable times ahead for silver ETFs.

“The gold/silver price ratio has fallen 3.4% so far in January to 69.7 as the silver price outpaces gold but still has further room to catch up to the long term average of 59,” according to an ETF Securities note posted by Teresa Rivas of Barron’s.