The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR), which are backed by physical silver bullion, are lower by nearly 3% over the past week, but silver could be ready to stage a comeback.
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.
Currently, the gold/silver ratio indicates the white metal could be a buy.
“From just a few trading days ago, the ratio has shot up, meaning that it takes way more silver to buy just one ounce of gold right now. Said differently, the ratio is getting extreme again, which means that silver could start moving quickly in price as more and more people decide to purchase silver over gold,” according to ETF Daily News.