Silver exchange traded funds are up 20% this year to outperform gold prices. While often overshadowed by gold’s historic rise, silver and related ETFs provide traders with an alternative, and cheaper, precious metal investment option.
Silver, like most commodities, has shown relatively low correlation with the stock and bond markets, making the asset a great portfolio diversifier. The precious metal is also viewed as a safe-haven asset, like gold. However, silver’s safe-haven status is slightly diluted due to its industrial applications and therefore connection with the global economy. [Poor Man’s Gold: Silver ETFs Shine]
“Whereas investment demand for gold makes up nearly 40% of total demand, investment demand for silver constitutes only 17%,” according to Morninstar analyst Abraham Bailin. “Industrial applications for silver constitute over 46% of the total, while that figure falls to roughly 12% for gold.”
Silver futures are trading above $33 an ounce after topping out around $50 last year.
Loose monetary policies from central banks provide a strong supporting argument for precious metals. The long-term inflationary impact could boost silver’s appeal as a store of value.
“Silver can retain its purchasing power under strong inflationary pressure,” Bailin added. “On the other hand, increased dollar strength can detract from silver’s value as investors are able to buy more metal with each bill.”
Silver ETFs include:
- ETFS Physical Silver Shares ETF (NYSEArca: SIVR)
- ETRACS CMCI Silver TR ETN (NYSEArca: USV)
- iShares Silver Trust ETF (NYSEArca: SLV)
- Powershares DB Silver Fund ETF (NYSEArca: DBS)
Leveraged silver ETFs:
- ProShares Ultra Silver ETF (NYSEArca: AGQ)
- ProShares UltraShort Silver ETF (NYSEArca: ZSL)
- VelocityShares 3x Long Silver ETN (NYSEArca: USLV)
- VelocityShares 3x Inverse Silver ETN (NYSEArca: DSLV)
Silver miner ETFs:
- Global X Silver Miners ETF (NYSEArca: SIL)
- iShares MSCI Global Silver Miners Fund ETF (NYSEArca: SLVP)
ETFS Physical Silver Shares
For more information on silver, visit our silver category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own SLV.