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, entered Monday with year-to-date losses of more than 3%, but some commodities market observers believe silver is poised to trend higher.
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.
SLV “has had a rough year, as the ETF is down by about 12.5% over the past 12 months. However, with the Fed likely to ease monetary policy going forward, the dollar as well as interest rates are likely to head lower, which should enable SLV to go higher,” according to Seeking Alpha.
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.
What’s Next for Gold and Silver?
Precious metals like gold and silver can provide investors with the uncorrelated diversification of their investment capital via the convenience, transparency and liquidity of an ETF.
“Additionally, the gold-to-silver ratio, the COT report, as well as SLV’s technical image imply silver/SLV is significantly undervalued at current levels and is likely to go much higher in the intermediate and longer term,” according to Seeking Alpha. “Despite the recent rebound, silver/SLV is trading around multi-year lows, and given the current economic atmosphere, it is likely to go substantially higher from current levels.”
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.
For more information on the silver market, visit our silver category.