Patience is a Virtue When it Comes to Silver ETFs

The iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest exchange traded funds backed by holdings of physical silver, have recently shown signs of life, indicating the previously sluggish silver funds could be ready to seize some of the precious metals spotlight from gold.

“After gold’s monster rally last week to price levels not seen since 2013, silver climbed up near the $15.40/ozmark. Silver bulls have been patiently waiting for a run-up to highs of $50 an ounce, last seen in 2011,” according to ETF Daily News.

Unlike its more radiant cousin gold, silver has had a significantly more lackluster performance over the past few years. After peaking around $50 an ounce back in 2011, just shy of the $50.35-an-ounce intraday record hit in January 1980, the metal has been trading in a much more narrow range over the last few years, between roughly $14 to $20 an ounce.

“The silver rally is on its way, but until then, it’s like watching paint dry, according to Peter Hug, global trading director for Kitco Metals Inc.,” reports ETF Daily News.

Headwinds for Silver

Silver’s slack start to 2019 is betraying what were optimistic forecasts for the metal heading into the year after a rough 2018. A more accommodative Federal Reserve would bolster the case for silver. Looking ahead, silver and other precious metals may continue to face an uphill struggle as the Federal Reserve is expected to keep hiking interest rates, which makes non-yielding assets like commodities less attractive.

According to ETF Daily News: “I expected a rally in silver,” Hug noted. “I thought silver would have had at least enough juice to go up to $16.”

Investors can tap silver equities with the Global X Silvers Miners ETF (NYSEArca: SIL) and related ETFs. 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.

“I still think if this gold rally is real and gold can get over $1,425, given the small amount of resistance levels above that level, eventually silver is going to catch it,” said Hug in the Kitco interview.

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