The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR), which are backed by physical silver bullion, are up more than 2% over the past week, lending efficacy to the notion that silver exchange traded funds could be viable plays in September.
Silver could get another boost if gold prices start rebounding in earnest. Indian demand is vital for gold because the country is the second-largest buyer of the yellow metal behind China. India, one of the world’s largest gold consumers, could be set to lower its import tax on bullion, which could be major catalyst for gold prices.
According to the Silver Institute, the largest single component of physical silver demand is industrial applications. About 55% of all silver consumed is for industrial use, including various segments like electronics, medicine, water purification, solar cells and chemical catalysts, among others.
Looking ahead, the ongoing negative interest rate environment, with European and Japanese central banks cutting benchmark rates deeper into the red to promote growth, could push investors toward precious metals as a more stable store of wealth.
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Moreover, unlike gold, silver sees much higher industrial demand. The precious metal enjoys heavy industrial demand that benefits from an expanding global economy. On a technical basis, silver looks appealing, as well.
“There is actually good news in silver. Silver is right back to punching through that early June high on the daily. Silver is now well above the 50-day and the 200-day moving averages. The immediate need is for silver to close out the week strong, and higher than the June 6th close of $17.70. It seems like we have gone through so much junk this year that it almost seems like a feat of strength,” reports ETF Daily News.
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.
For more information on the silver market, visit our silver category.