Silver exchange traded funds have been outperforming, with silver prices hitting a 10-month high Monday, as rebounding industrial demand and a surge in safe-haven investor demand help strengthen the precious metal.
The iShares Silver Trust (SLV) gained 2.0% on Monday and increased 21.6% over the past three months, with Comex silver futures contracts now hovering around $19.57 per ounce. In comparison, gold prices gained 6.6% and the S&P 500 rose 14.7% over the past three months.
Silver prices have jumped 66% since their mid-March lows, outpacing gold, the S&P 500, and an ICE BofA index of U.S. government bonds, the Wall Street Journal reports.
Precious metals have strengthened in recent months after the aggressive stimulus measures out of global central banks and world governments to prop up economies weakened by the coronavirus pandemic. The interest rates cuts out of the Federal Reserve and others have lowered the opportunity cost of owning precious metals, which do not come with a yield. Furthermore, many anticipate the aggressive stimulus measures to inundate the global economy with cash, which would drive up inflation and make hard assets a more attractive play to safeguard purchasing power.
Meanwhile, silver unlike gold has benefited from rising industrial activity in the U.S., China, and elsewhere. Silver enjoys widespread industrial applications in solar panels, medical equipment, and consumer electronics, among other goods. Consequently, silver prices exhibit a greater correlation to economic growth.
“You’re flying on two engines, which are commercial demand and investor demand,” Michael Widmer, a commodities strategist at Bank of America, told the WSJ. “That’s driving silver prices higher.”
As a way to gain exposure to the silver price moves, the iShares Silver Trust has been a popular play among investors. Assets under management in BlackRock’s iShares Silver Trust, the biggest silver-backed ETF, have surged by $2.45 billion to $9.72 billion this year, according to FactSet data.
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