After living in the shadows of their gold brethren for much of this year, the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR) are suddenly hot as both silver ETFs are higher by more than 14% over the past month.
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.
“The price of silver rose for the ninth time in 12 sessions Monday, hitting a nearly four-year high with investors flocking to precious metals during the economic uncertainty caused by the coronavirus pandemic,” reports Amrith Ramkumar for the Wall Street Journal.
Super Silver ETFs
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.
“Front-month silver futures advanced 2.2% to $20.124 a troy ounce on the Comex division of the New York Mercantile Exchange, recording their highest close since August 2016. Prices are up 8.5% so far in July and have surged 71% from a low hit in mid-March, lifted by the steady haven buying that also has powered gold to a multiyear peak,” according to the Journal.
SIVR seeks to replicate, net of expenses, the price of silver bullion. The shares are backed by physically allocated silver bullion held by the custodian. All physical silver held conforms to the London Bullion Market Association’s rules for good delivery.
“And some analysts expect a flood of stimulus programs around the world to eventually stoke inflation, devaluing paper money and making gold and silver attractive stores of wealth,” according to the Journal. “Silver has risen at an even faster pace than gold lately, reversing a yearslong trend. Silver had languished behind its precious-metal peer for years, pushing the ratio of the gold price to the silver price to historic levels.”
For more alternative investing ideas, visit our Alternatives Channel.
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.
