Silver has been quite volatile over the past couple of years.
The price of the white metal has been declining moderately as of
late despite the monetary easing measures of the Federal Reserve
to stir up growth in the economy.
Currently, silver bullion is trading in the range of $27-$31
per ounce. It is expected to go up to $33 per ounce this year and
again revert to $31 per ounce in the next, according to
. This means that investors could get a decent return of 6%-9%,
if they buy and hold the metal for one year, and possibly more if
global trends continue.
This is because the demand for this precious metal will grow
as we move further into 2013 due to low interest rates, and
strong emerging market demand. Thus, silver bullion will not only
continue to benefit from being a precious metal and a store of
wealth, but also its several key industrial applications (read:
Silver--The Equity Like Precious Metal ETF?
A pick-up in industrial activities and the consequent
improvement in the global economic sentiments are also favorable
for the price of silver as the metal has a number of industrial
Countries like South Korea, Taiwan, China and the U.S. are
seeing increasing growth in industrial output, an important
factor considering about 50% of the metal's total demand comes
from industrial applications while 30% comes from jewelry,
silverware, coins and medal manufacturers.
Further, the prices are poised to move higher due to the
steady investor appetite for hard assets and robust coin and bar
purchases, a factor that could act as another catalyst for the
Investors seeking to play the bullish trend in the precious
metal space through
have a variety of options at their disposal (read:
Invest Like Morgan Stanley with These 5 Commodity
). Investors should note that silver metal ETFs are generally
more volatile than their gold counterparts thanks to their high
The 3 most popular ETFs in the silver bullion space are SLV,
SIVR and DBS, each of which we have briefly highlighted below
(see more ETFs in the
These products have shown signs of weakness of late and lost
around 5% year-to-date. In spite of this, we currently have a
Zacks ETF Rank #1 or 'Strong Buy' on silver ETFs, suggesting a
stronger 2013 for these commodities:
iShares Silver Trust ETF (
Launched in April 2006, this is the largest silver ETF with
AUM of $10.4 billion. The fund seeks to match the spot price of
silver, net of fees and expenses and own silver bars to back the
It tracks almost 100% the physical price of silver bullion
measured in U.S. dollars, and kept in London under the custody of
JPMorgan Chase Bank N.A. Each share represents about an ounce of
silver at current prices.
The ETF is the most liquid and widely traded physically backed
silver offering in the precious metal space. Though not a
low-cost choice due to its 50 bps expense ratio, SLV has a lower
bid ask spread, which could lessen total costs slightly for this
popular fund (read:
Time to Invest in Low Volatility ETFs?
ETFS Physical Silver Shares (
This fund offers simple and cost-efficient ways for investors
seeking exposure to silver bullion.
It tracks the spot price of silver, net of fees and expenses,
and owns silver bars to back the shares under the custody of HSBC
Bank USA in London. Launched in July 2009, the product so far
attracted assets of $580 million.
The product is the low cost choice in the silver commodity
space charging investors a fee of 30 bps per year with relatively
tight bid/ask spread. It trades in average volumes of more than
200,000 shares per day.
PowerShares DB Silver ETF (
This fund provides exposure in the futures market rather than
spot market and tracks the DBIQ Optimum Yield Silver Index Excess
Return index, before fees and expenses. The index comprises
silver future contracts.
The ETF was launched in January 2007 and since then has been
able to amass an asset base of $62.6 million (read:
Zacks Top Ranked Silver ETF: DBS
The product is a high cost choice in the silver bullion space,
charging 70 bps in fees per year from investors. Additionally, it
has a wide bid/ask spread given its small average daily volume of
16,000 shares that increases the total cost of the productfor
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PWRSH-DB SILVER (DBS): ETF Research Reports
ETF-SILVER TRST (SIVR): ETF Research Reports
ISHARS-SLVR TR (SLV): ETF Research Reports
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