Among precious metals ETFs, gold ETFs are getting plenty of positive attention this year and rightfully so, but the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver, are up nearly 15% and could be poised for more upside.
Silver ETFs are pushing to the upside amid increased expectations of more Federal Reserve rate cuts, even as some investors locked in profits from the white metal’s recent rally. Silver is believed by many investors to be inversely correlated with interest rates. Silver prices are down almost 10% from the September highs, but some commodities market observers believe that could be a buying opportunity.
“The silver price rally that began in May pulled the gold-silver ratio away from highs in the 90s, while the long-term average is about 65, says Johann Wiebe, lead metals analyst on the GFMS team at Refinitiv, a global financial data provider,” reports Myra Saefong for Barron’s.
Silver has been a strong performer even relative to its more expensive precious metal brethren gold, but December futures will be key in determining whether it can sustain its strength.
Sizing Up Silver
Data suggest silver demand is increasing, a factor that should bode well for SIVR and SLV.
“Global silver demand rose by 4% in 2018 to reach a three-year high at 1.03 billion ounces, while global silver mine production fell for a third straight year, by 2%, to 855.7 million ounces last year, according to The Silver Institute’s World Silver Survey 2019 issued in April,” reports Barron’s.
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.
“Primary silver producers needed prices in the upper teens to lower $20s for their mines to break even, leading companies to diversify with other metals and focus less on developing their silver properties,” notes Barron’s.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.