The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR), which are backed by physical silver bullion, each rose more than 1% last week, but the major silver ETFs are still trying to cobble together credible momentum.
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.
Moreover, unlike gold, silver sees much higher industrial demand. The precious metal enjoys heavy industrial demand that benefits from an expanding global economy.
“Silver remains weaker, relative to gold. For July to prove its potential for change, price needs to follow through to the upside, or, at a minimum, have a shallow correction,” reports ETF Daily News.
Some commodities market observers see more upside coming for silver and the aforementioned exchange traded funds. It could just be a matter of investors properly timing new entries into the likes of SIVR and SLV. Expect gold prices to continue affecting silver and the related ETFs.
Related: Choosing the Right Precious Metal ETF for the Right Job
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.
“Debt around the world is in the trillions and has never been higher at any time in history. Even worse, financial derivatives is 10 to 100 times greater [owned by financial banks, for the most part], with no hope of ever being able to control them once market reverse to the downside,” according to ETF Daily News.
Currently, bearish sentiment towards silver continues to pressure the market as net futures positioning touched its lowest level since December 2015, Gold said. On the other hand, short positions have surged to 83% in June from the month prior on falling inflation expectations and rising above ground inventories.
Since the start of the third quarter quarter, investors have added a combined $74.5 million to SLV and SIVR.
For more information on the silver market, visit our silver category.