The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR), which are backed by physical silver bullion, are up just over 5% over the past week, marking one of the most impressive stretches for the silver exchange traded funds since earlier this year.
Some commodities market observers believe silver has more upside ahead of it and that the recent pop for the white metal is a sign of a potentially epic rally. That sentiment could be bolstered by the struggling dollar.
The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP), the tracking exchange traded fund for the U.S. Dollar Index, is one of the worst-performing currency exchange traded funds this year. UUP is lower by almost 9% year-to-date. Silver and other commodities are denominated in U.S. dollars, meaning weaker greenback is often supportive of upside for commodities prices.
“Things seem to have begun to turn around after the recent news about North Korea and the inactions in regards to U.S. legislation. Both gold and silver have broken their short term trends. We might be looking at a multi-week uptick from here,” reports ETF Daily News. “The next secular move in gold and silver are based on fundamentals, not the Fed, Trump or Korea. They have everything to do with global debt and deficits. Korea happens to be today’s trigger the next wave up will be a different trigger.”
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.
“Alternately, if we break back below the $17 level, then I think we may pull back somewhat. I don’t have any interest in trying to sell until we below the $17 level, although I am the first to admit that Silver tends to be extraordinarily volatile, and can turn directions rather rapidly,” notes FXEmpire.
To this point in the third quarter, ETF investors have been skittish with silver ETFs, having pulled $65.5 million from SLV. However, SIVR has seen third-quarter inflows of almost $7 million.
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