Silver exchange traded funds rose 5% to outperform gold prices Thursday after the European Union cobbled together a deal designed to buy more time to sort out its debt logjam.
Silver ETFs have also received a boost lately from better economic data, as the metal has industrial applications.
ETFs tracking silver prices such as iShares Silver Trust (NYSEArca: SLV - News ), ETFS Physical Silver Shares (NYSEArca: SIVR - News ) and Powershares DB Silver Fund (NYSEArca: DBS - News ) rallied about 5% on Thursday. [ Silver ETFs Climb 5% on Waning Sentiment, Fed Talk ]
“The industrial component of silver is kicking in and it had a lot of catch up to do to gold,” Charles Nedoss, broker and futures analyst with Olympus Futures, told Dow Jones Newswires.
Europe plans on increasing the bailout fund to $1.4 trillion, or five times its previous size, and Eurozone banks will be recapitalized with as much as $150 billion, according to the report.
The latest debt bailout in Europe has raised fears of inflation and further monetary debasement — powerful fundamental factors that are driving precious metals.
Commerzbank believes silver will average $35 an ounce this quarter and increase to $40 by the end of next year, reports Allen Sykora for Commodity Online .
“Government debt in the major industrial countries is too high. Decision-makers at the Fed are increasingly considering another quantitative easing, which would undermine trust in the world’s main reserve currency – the dollar – further and cause central banks to diversify their currency reserves even more,” Commerzbank said.
iShares Silver Trust
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own SLV.