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, are struggling as highlighted by year-to-date losses of almost 7%.
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.
Now, some market observers believe silver prices could fall further, potentially spelling opportunity with the ProShares UltraShort Silver (NYSEArca: ZSL). ZSL attempts to deliver double the daily inverse returns of the Bloomberg Silver Subindex (BCOMSI). Silver’s technicals could be signaling more downside is imminent.
“Silver was never able to break above the trend-line running down off the February peak, and with another recent round of weakness it has put itself firmly at risk of further losses. Looking to the next meaningful level of support, we have to look to the 2018 lows just under $14,” according to Daily FX.
Silver Investing Slump
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 accomodative 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.
“There is also a line running over from the 2015 low of 13.65 right in the vicinity of 14, which helps make the area around 14 a solid one to watch should we soon see it. To turn the picture bullish a good deal of work will need to be done; for starters, bottoming, but then a break above the steadfast trend-line from the yearly highly will be required for top-side momentum to have a chance at picking up,” according to Daily FX.
The Proshares Ultra Silver (AGQ) is the bullish counterpart to the bearish ZSL.