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 shedding their laggard ways and are joining the 2019 precious metals complex rally.
This month, the two silver ETFs are higher by nearly 8% apiece and SLV is close to taking out its 52-week high. Unlike gold and palladium, 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.
Data suggest professional traders have recently been piling into silver.
“Fund managers sharply increased their bullish positioning in silver futures, while largely maintaining the status quo in gold, during the most recent reporting week for data compiled by the Commodity Futures Trading Commission, analysts said,” reports Kitco News.
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. The Fed meets this week and is widely expected to lower interest rates with an optimistic scenario calling for a half-point rate cut.
“The disaggregated report shows that money managers’ net long in silver futures jumped to 51,656 contracts from 27,764 the week before. The net length is now more than triple the 15,527 contracts from two weeks ago,” according to Kitco.
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. SIL is also higher by nearly 8% this month.
“TD Securities said speculators ‘continued to load up on fresh long positions and heavily cover shorts’ in both silver and platinum on news that a U.S. negotiating team is headed to China for face-to-face talks this week,” notes Kitco.
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