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Silver ETFs Leading August Surge in Precious Metals


Gold and silver ETFs were ripping higher Friday as the U.S. dollar weakened, putting the precious metal funds on track for their third straight week of gains.

SPDR Gold Shares (GLD) was up 1.3% in morning trade while iShares Silver Trust (SLV) gained 2.6%. In currency markets, PowerShares DB US Dollar Index Bullish Fund (UUP) slipped 0.3% as the greenback weakened against is rivals.

Silver is outperforming gold by a wide margin in August, which is seen as a bullish sign for precious metals. SLV is up nearly 20% so far this month, compared with a gain of about 5% for GLD.

Gold is testing $1,400 an ounce, a technical resistance level this year. The decline in prices has stoked demand for physical gold in key consumer nations China and India, according to Bloomberg.

Yet silver is leading the rally this month.

“Silver prices are substantially more volatile than gold,” says Morningstar analyst Alex Bryan in a report on SLV. “This is largely because silver swings between dual roles as a useful industrial metal and safe-haven asset.”

Silver can behave like a “high-beta version of gold” because it can be more susceptible to swings in investment demand, he added.

The chart below shows the relative performance of silver (SLV) versus gold (GLD).

Full disclosure: Tom Lydon’s clients own SLV and GLD.

The opinions and forecasts expressed herein are solely those of John Spence, 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.