Silver ETFs Could Finally be Ready to Bounce

ETF Trends

The iShares Silver Trust (SLV) and the ETFS Physical Silver Shares (SIVR) are trading modestly higher Monday on speculation the metal is nearing a bottom following a tumble of almost 9% over the past three months.

Last week, silver exchange traded products saw the strongest levels of inflows in 10 weeks.

“Inflows of US$20.9mn last week show that investor enthusiasm for the metal that usually trades in gold’s shadow is growing. With global economic growth rising, prospects for the metal, used in many industrial applications, are improving,” according to a new research note from ETF Securities.

In a trend that was also seen last year, investors continue to allocate capital to silver ETFs even as gold funds suffer massive redemptions. For example, SLV and SIVR have pulled in over $102 million combined in the current quarter while over $1 billion has been taken out of the SPDR Gold Shares (GLD) . [Silver ETFs See Inflows]

Silver ETFs could also benefit later this year from another expected supply deficit, which could tighten the market for the metal.

“Silver is likely to post another supply deficit this year, following last year’s trend, further tightening the market. Despite the US imposing higher tariffs against Chinese solar panel imports last week, its new climate change policy announced last week is likely to lift the demand for photovoltaics in general. Solar panels are the fastest segment of demand growth for silver fabrication, with a compound annual growth rate of 20% over the past decade and are now as significant as photography in terms of sources of silver demand,” said ETF Securities.

If silver notches a near-term rally, upside would likely be fueled by short-covering. Last week, short bets on silver climbed to the highest levels in eight years, Bloomberg reported, citing the U.S. Commodity Futures Trading Commission.

iShares Silver Trust

View photo


ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD and SLV.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

View Comments (2)