Silver Prices: Are Silver ETFs Back On Track? (DBS, USV, SLV, SIL, SLVP, SIVR)
Eric Dutram: After peaking in April of 2011, silver prices have had trouble regaining their lofty levels. The white commodity has instead briefly flashed above the $40/mark in the late summer of 2011 before returning to a level around the $25/oz. range.
While the metal appeared to be back on track to start 2012, this soon dissipated as the dollar strengthened in the face of European woes and investors shunned commodities for stocks once more. However, this trend appears to be reversing yet again as silver prices have taken off in recent weeks and have finally breached the $30/oz. level for the first time in months (also see Platinum ETF Investing 101).
This recent bullish trend in the silver market is undoubtedly driven by the Federal Reserve. The central bank seems poised to initiate another round of QE in hopes of boosting sagging growth levels, although many believe that this will curtail the dollar’s value and boost precious metals in the process.
Furthermore, although the metal is more impacted by industrial events than its cousin gold, the metal is also more volatile due to its more ubiquitous nature and lower price point. This has allowed silver to greatly outperform gold in recent weeks and the trend could continue in a bull market phase for precious metals, making silver an intriguing choice at this juncture (read Silver ETFs Outshine Gold).
In fact, a recent look at the ETF space reveals a very interesting path for silver ETFs over the past few weeks. According to data from XTF.com, of the top eight best performing non-leveraged ETFs in the past month, five had a focus on silver.
This represents a pretty big reversal from many of these products performances’ over the trailing one year period in which all were down more than 20% in the time frame. Potentially, it suggest that a trend shift is underway in the silver market and that it could especially move if Bernanke and Company authorize another round of bond purchases before the year is over (read The Five Best ETFs over the Past Five Years).
For these reasons, it could be time for some investors to take a closer look at the silver market once again. Clearly, Bernanke is putting a floor underneath silver prices in the near term, and a robust recovery seems quite unlikely at this point, suggesting that more QE will probably be used sooner rather than later.
If investors are looking for an ETF approach, we have highlighted six of the top performing ETFs in the space—which have all added more than 13% in the last month– briefly below. Any of these options could be great picks for investors seeking more silver exposure before more easing is inevitably unleashed on the economy:
- PowerShares DB Silver Fund (NYSEARCA:DBS) – One of the top performing ETF with a focus on bullion, DBS utilizes futures in order to achieve silver exposure. The fund charges a somewhat high 79 basis points a year in fees and volume is quite light, but it has managed to outperform in shorter time periods (although this trend is reversed over longer time frames).
- E-TRACS UBS Bloomberg CMCI Silver ETN (NYSEARCA:USV) –Although relatively unpopular, this silver ETN is actually the best performing silver product over the trailing one month period. The note has just edged out its peers putting up a gain of roughly 19.4% in the time frame, although it should be noted that trading volumes are quite low, suggesting wide bid ask spreads.
- Global X Silver Miners ETF (NYSEARCA:SIL) - This Global X fund has been the best performing silver-focused mining ETF over the past month, thanks in part to its equity focus. The product charges investors 65 basis points a year in fees but has 30 components in its basket, with Canadian firms taking the top spot at 53% of assets (see Time to Consider the Silver Miners ETF).
- iShares Silver Trust (NYSEARCA:SLV) – This is easily the most popular silver ETF on the market today with nearly $10 billion in assets and over 13 million shares changing hands on a daily basis. The fund is in the middle of the road for expenses, but the volume is unmatched, making it a solid choice for traders seeking tight bid ask spreads.
- iShares MSCI Global Silver Miners Fund (NYSEARCA:SLVP) – This low cost choice in the silver mining space charges just 39 basis points a year in fees, but sees paltry volume levels and wide bid ask spreads. However, the fund does provide similar exposure to SIL at a lower cost, making it a potential replacement for those unconcerned with low trading volumes and a heavy concentration in the top securities (see more in the Zacks ETF Center).
- ETF Securities Silver Trust (NYSEARCA:SIVR) – The cheapest ETF, bar none, in the silver market is this one from ETF Securities which charges just 30 basis points a year in fees. Volume is also pretty solid on this product while AUM is pretty good as well. Additionally, the bullion is stored in secure vaults in Europe where random audits and bar number lists are present in order to give investors more peace of mind over their investments.
Written By Eric Dutram From Zacks Investment Research Long silver bullion
In 1978, Len Zacks discovered the power of earnings estimates revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank, a peerless stock rating system whose Strong Buy recommendation has an average return of 26% per year.