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Silver Miner ETF Rises 30% in Three Months on Reflation Trade


Global X Silver Miners ETF (SIL) rallied more than 30% in the third quarter and was the best performer among unleveraged exchange traded funds.

Gold and silver have surged following the Federal Reserve’s QE3 announcement but miner ETFs have outperformed precious metal prices.

“The introduction of the European Central Bank’s Outright Monetary Transactions … and the implementation of the Federal Reserve’s quantitative easing ad infinitum greatly improved the prospects that our forecast of dollar weakness will come to fruition at a swift pace,” said Jason Schenker, president of Prestige, in an Investor’s Business Daily report. “The downside risks to gold prices have been greatly reduced now that the Fed is on an endless buying spree of mortgage-backed securities.”

Miner ETFs are making up for lost time after seriously underperforming precious metal prices in recent years.

Global X Silver Miners ETF is up 21% the past month, compared with a gain of about 13% for iShares Silver Trust (SLV). Silver prices were trading around $35 an ounce Monday morning. Despite the rally, the silver miner ETF remains below its 52-week high. [Gold, Silver Miners Lead the Way in Q3]

Investors who have been accumulating silver in recent years “have obviously fared quite nicely,” writes Scott Wright at Resource Investor. “But there’s another silver vehicle that in some cases has fared even better. Silver stocks, leveraged plays on the underlying metal, have had quite the bull market of their own.”

Global X Silver Miners ETF has allowed investor to easily buy a basket of miners with one trade while the fund reduces single-stock risk and offers geographical diversification, he added.

Global X Silver Miners ETF

Full disclosure: Tom Lydon’s clients own SLV.

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.