Precious metals ETFs are getting hammered on Monday, as stocks continue to plummet amid a global stock market sell off that is continuing the carnage that began earlier this month.
Investors are scrambling to get into cash, as most commodities and stocks are down for the day, including silver and gold, which are both taking a beating. October gold futures were last down $52 on the day to trade at $1,910, while December Comex silver plummeted over $3 an ounce, more than 10%, to break below $24 briefly before rebounding some.
The drop in silver is especially critical however, as the $25 per ounce level is a key psychological barrier for many investors and traders, and could usher in more downside according to some analysts. However, there is also likely to be some bargain hunting in silver, say analysts, which represents an opportunity to enter the silver market at reduced priced levels to take advantage of an eventual move higher.
“The $25 level is of course a large, round, psychologically significant figure, and of course the $24 level underneath there will be important as well. To the upside, if we were to recapture the $26 level, it is likely that the market could try to go back towards the $28 level. Pay attention to the US dollar, because it will lead the way going forward. If the US dollar continues to strengthen quite drastically, the silver markets will continue to fall. Do not get me wrong, I have no interest in whatsoever when it comes to shorting this market, so I am looking for opportunities to pick up silver ‘on the cheap.’ It has gotten way ahead of itself, and it is worth noting that gold looks very similar. That being said, we should have quite a bit of negativity in general, but I do think that eventually we will get a certain amount of value in the precious metals,” explained Christopher Lewis of fxempire.com.
For investors looking to use ETFs to trade precious metals, the iShares Silver Trust (SLV) is a classic place to begin. Aberdeen also has quite a collection. Aberdeen’s suite includes the Aberdeen Standard Gold ETF Trust (SGOL), which comes with a 0.17% expense ratio, and the Aberdeen Standard Physical Silver Shares ETF (SIVR), which has a 0.30% expense ratio. Additionally, the Aberdeen Standard Physical Precious Metals Basket Shares (NYSEArca: GLTR), which has a 0.60% expense ratio, is a cornucopia of metals including gold, silver, platinum, and palladium.
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