Silver ETFs Outshine Gold - ETF News And Commentary
27 Febrero 2012 - 1:00AM
Zacks
Gold has had an excellent run so far in 2012, returning more
than 13% year-to-date. However, the metal that has handily
outshined gold is its so-called poor cousin-silver, which has
returned a whopping 27% year-to-date.
Some of the factors that have supported precious metals’
excellent run in the current year are rising inflationary
expectations due to continued easing policies from the central
banks, and heightened macroeconomic uncertainty in many countries.
Precious metals act as inflation hedge and also as safe haven
assets. (Read- Gold ETFs May Continue to Shine in 2012)
Interest rates in developed and many emerging markets remain
very low, leading investors towards precious metals for better
store of wealth. Investment demand for the precious metals has been
rising as a result. Unlike gold, which also derives its importance
from being a reserve asset, silver is generally not recognized as a
reserve asset. Consequently, there is a very limited amount of
silver stocks held by governments or central banks.
Historically, silver has had a low correlation with most asset
classes and helps in diversifying a portfolio. Further like
platinum, silver is used in wide range of industrial applications
and its price therefore is affected by the level of global economic
activity. (Read- Gold ETFs Surge On Fed Outlook)
About 50% of the metal’s total demand comes from industrial
applications whereas demand from jewelry/silverware/coins &
medals manufacturers accounts for ~30% of the demand. More than 65%
of the global supply of the metal comes from South Africa.
As the overall global manufacturing has continued to improve
slowly, the demand for silver has been on the rise. If the US
economy can stay on its modest recovery path, silver and platinum
will continue to find support. As such both these metals should be
a part of the portfolio. (Read- Time to Invest in Platinum
ETFs?)
While gold has been on the rise for eleven years in a row,
silver had a negative return of about 8% last year as the fears of
global recession led to drop in industrial demand for the metal. In
general, silver metal and the ETFs are more volatile than gold. As
a result, the investors may find suitable investment opportunities
in silver on any pull-backs.
ETFs present a cost-effective, secure and convenient way to get
exposure to silver metal.
iShares Silver Trust (SLV)
SLV is the largest, most liquid and widely traded ETF. It seeks
to track the spot price of physical silver and its share price
reflects the market price of an ounce of silver less trust’s
expenses.
The custodian of the trust holds physical silver bullion in
London on behalf of the trust. Started in April 2006, the trust
currently has net assets of $10.7 billion and charges a fee of
0.50%. The ETF has returned 37.04% in last three years and 15.29%
since inception. The sponsor intends to get the vaults audited
annually and the inspection certificates are available on the
website.
EFTS Physical Silver Shares Trust (SIVR)
SIVR is a relatively newer ETF; launched in July 2009, it
currently manages assets of $637.6 million. The sponsor of the fund
has waived a part its fee until July 2012, which had lowered the
expense ratio to 0.30% from gross ratio of 0.45%. Like SLV, this
trust holds physical silver bullion in London and the shares
represent beneficial interest in the trust. The price of SIVR is
based on the spot price of silver less trust’s expenses.
The silver bullion held by the trust is inspected biannually and
the silver bar numbers held by the trust are published daily.
So, basically SIVR fulfills the same investment objectives as
SLV at a lower cost but we may add that though SIVR is cheaper in
terms of its expense ratio that it charges to the investors, a part
of the saving may be taken away due to higher trading costs for
this ETF (higher bid-ask ratio), since it is much less liquid than
SLV.
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days. Click
to get this free report
Abrdn Silver ETF (AMEX:SIVR)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Abrdn Silver ETF (AMEX:SIVR)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024