The Global X Silvers Miners ETF (NYSEArca: SIL) and the PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF (NYSEArca: SILJ) were two of 2016’s best-performing non-leveraged ETFs. In fact, SILJ more than doubled last year, making it the best-performing leveraged ETF.
However, much of investors’ enthusiasm for silver and the aforementioned miners ETFs waned in 2016’s latter stages as the dollar gained momentum and investors fretted about the specter of an interest rate hike by the Federal Reserve, a scenario that came to pass in December. Good news: SIL and SILJ have their momentum back to start 2017.
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.
“Because silver stocks aren’t widely followed, most investors and speculators are unaware of this sector’s stellar upside potential. Silver mining is a challenging business both geologically and economically, so there aren’t many primary silver miners out there. And their stocks’ collective market capitalization is small, a rounding error compared to the broader stock markets. That doesn’t leave much room for funds to buy,” according to SilverSeek.com.