Should You Be Buying Silver Bullion ETFs? (SLV, USV, SIVR, DBS, AGQ)

Since reaching a low of just under $9 per ounce in November 2008, silver has more than doubled in price…. and it’s now closing in on its highest point in more than a decade.

This price strength from the “poor man’s gold” has spilled over into tremendous investment demand – especially so for silver coins. 

The U.S. Mint sold more Silver Eagles in the first quarter of this year – just over nine million – than any prior quarter in its history. The Royal Canadian Mint produced 9.7 million silver maple leafs in 2009, also a record.
 
Take a look at the jump in U.S. Mint coin sales since 2007:
 
 
Silver bullion ETFs are growing, too, experiencing a five-fold increase in metal holdings since 2006.
 
I’m a huge long-term bull on silver and gold. The only way the Western world can pay for its huge unfunded liabilities is to print more money… which is very bullish for precious metals.
 
But… I’m also a contrarian. With so much investment demand toward silver right now, the hard question is, “Should I be buying silver right now?”
 
Let’s first look at the big picture. The following chart shows how far silver is below its inflation-adjusted peak reached in 1980.
 
 
As you can see, from a big picture point of view, silver hasn’t run up all that much in the past decade.
 
So, my advice to anyone who does not own silver, and wants the long-term wealth protection precious metals offer, go ahead and buy. The risk of buying silver at current prices is lower than owning none at all.
 
If you do own some silver but want to add to your holdings, I’d wait for a drop in price, in part because silver could fall more easily than gold when the economy is found to be more fragile than what many believe. Approximately half of silver’s demand comes from industrial uses, so it’s more susceptible to selloffs than gold if the global economy gets weaker (we at Casey Research believe it will).
 
Further, summer usually brings pullbacks in precious metal prices. This is the tendency, though we can’t guarantee this summer will follow past trends. Still, our best guess is to anticipate another leg down sometime this year, perhaps this summer. If you already own silver, look for a correction before adding to your holdings.
 
To summarize, if you don’t own silver yet, go ahead and buy some now. It’s enjoyed a considerable run recently, but is still well below its previous highs when viewed over the long term. If you simply want to add to your silver holdings, take advantage of its volatility and wait until prices fall at least 10%.
 
 
Editor’s note: The above is adapted from the May issue of Casey’s Gold and Resource Report. In this issue, you’ll learn Jeff’s top recommended dealers, including special pricing, along with Jeff’s top silver ETF pick and the top two silver stocks to buy. With a subscription, you’ll also have access to Casey’s annual precious metals Summer Buying Guide. You can check out all the research, risk-free, for just $39 a year, with a three-month, 100% money-back guarantee. Learn more here.
 

 

We have compiled a list with some details on Silver Bullion ETFs below for you to take a look at.
 
iShares Silver Trust Fund (NYSE:SLV) 
 
The objective of the investment is to reflect the price of silver owned by the trust less the trust’s expenses and liabilities. The fund is intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver. Although the fund is not the exact equivalent of an investment in silver, they provide investors with an alternative that allows a level of participation in the silver market through the securities market.
 

Chart foriShares Silver Trust (SLV)

E-TRACS CMCI Silver ETN (NYSE:USV)

The investment seeks to track the price and performance yield, before fees and expenses, of the UBS Bloomberg CMCI Silver Total Return index. The fund is designed to be representative of the entire liquid forward curve of the silver contracts. The index measures the collateralized returns from a basket of silver futures contracts. It is comprised of the silver futures contracts included in the CMCI with five target maturities. 

Chart forUBS E-TRACS CMCI Silver TR ETN (USV) 
ETFS Physical Silver Shares ETF (NYSE:SIVR) 

ETFS Physical Silver Shares (“the Shares”) are issued by ETFS Silver Trust (“the Trust”). The investment objective of the Trust,Symbol: SIVR is for the Shares to reflect the performance of the price of silver bullion, less the expenses of the Trust’s operations. The Shares are designed for investors who want a cost-effective and convenient way to invest in silver. 

Chart forETFS Physical Silver Shares (SIVR)
 

PowerShares DB Silver Fund (NYSE:DBS) 

The investment seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Liquid Commodity Index – Optimum Yield Silver Excess Return. The index is a rules-based index composed of futures contracts on silver and is intended to reflect the performance of silver. 

Chart forPowerShares DB Silver (DBS)

ProShares Ultra Silver ETF (NYSE:AGQ) 

The investment will seek to replicate, net of expenses, twice the performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics twice the return of the index. It may employ leveraged investment techniques in seeking its investment objective. 

Chart forUltra Silver ProShares (AGQ)

ProShares UltraShort Silver ETF (NYSE:ZSL) 

The investment will seek to replicate, net of expenses, twice the inverse daily performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics inverse to the index. It may employ leveraged investment techniques in seeking its investment objective. 

Chart forUltraShort Silver ProShares (ZSL)
 

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