As Silver Mania Fades, Focus on Fundamentals, 'SLV' | ETF Trends

As the excitement around Reddit users driving up silver prices starts to dwindle, investors can once again re-focus on fundamentals. ETF investors specifically can give the iShares Silver Trust (SLV) a closer look.

Overall, SLV gives ETF investors:

  1. Exposure to the day-to-day movement of the price of silver bullion
  2. Convenient, cost-effective access to physical silver
  3. Use to diversify your portfolio and help protect against inflation

SLV Chart

The fund is up 46% the past year and just broke through the $27.39 high set back on August 10, 2020. SLV reached a high of $27.98 on February 1, with a dose of heavy volume backing the fund thanks to a flurry of trading activity.

The relative strength index (RSI) is below overbought levels, so this could be an opportune time to get in on SLV. In terms of fundamentals, one major bank is liking what they see for silver prices moving forward.

SLV Chart

Bank of America Banking On Silver

With a deluge of retail traders jumping off of GameStop stock and into silver, prices were doused with heavy volatility. Bank of America is still bullish on silver once the smoke clears.

“In a report published Tuesday, Michael Widmer, precious metals analyst at Bank of America, said that he remains bullish on silver, expecting prices to push to $35 with the chance that prices spike to all-time highs around $50 an ounce,” a Kitco news report said. “Widmer added that Monday s failed rally above $30 an ounce is a bit of a concern for the market in the near-term. However, he also said that the market remains supported by strong fundamentals. His comments come as silver prices give up nearly all of Monday s gains. March silver futures last traded at $26.77 an ounce, down 9% on the day.”

The speed at which prices have rallied is a concern, with some of the traditional markets like China trading at a deep discount now,” he said. While we remain bullish on fundamentals, this is worth following because a lack of commercial buying ultimately means that the rally may come to an abrupt end once the recent strong investor buying fades.”

Widmer also noted that the volatility in silver prices is not something out of the ordinary.

Many of the usual market metrics have remained within recent ranges, suggesting that dislocations have been manageable. In particular, retail investor trends do not appear to have been significantly disruptive,” he said in the report.

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