While 2013 may have begun in a near commodity panic, prices have
begun to rise for a number of natural resources as of late. This is
particularly true in the precious metal market, as hard asset
demand has surged while geopolitical risks have jumped as well.
These conditions have pushed some investors to scoop up precious
metals, hoping to ride a wave of strength higher. While we have
certainly seen this in the gold market, silver is presenting itself
as an interesting opportunity as well (see
all the Precious Metal ETFs here
That is because this metal plays off of both industrial and safe
haven demand, which has been a great combination as the U.S.
economy-and other key economies such as in Europe-have picked up
steam, while Mideast tensions and concerns over easing programs
have risen too.
Furthermore, interest in silver ETFs in particular has been
relatively high. In fact, while gold ETFs have seen more or less
flat asset accumulation over the past month, silver ETFs have seen
more than $100 million in inflows. This suggests that investors are
increasingly looking at the white metal for opportunities in this
interesting, but still uncertain climate.
Recent Trends, Future Demand
These investors have seen solid gains lately, as silver has risen
by nearly double digits in the last three months, while
has added just over 2.2% and the S&P 500 was actually negative
in the time frame. But investors have to be asking; can this trend
continue and can silver stay on top?
We think that the answer is yes, especially if global manufacturing
activity continues to rise, and if broad industrial demand
increases. After all, nearly half of silver use goes towards
industrial applications, so this looks to be a key driver (see
Silver ETFs Surge on Solid industrial Demand
Beyond that, international events also look to play a key role.
Geopolitical concerns are building over a possible Syrian conflict,
and there are concerns with spillover into other nations in the
region. Additionally, there has also been some silver interest from
the key Indian market, as import taxes on gold have dulled the
yellow metal's appeal in comparison, setting up a very favorable
situation for silver from an international perspective.
How to Play
Investors can always just buy up silver bullion, or even look to
silver miners such as in the ETF,
. However, another option might be to play silver with an ETF, such
as either of the following funds:
iShares Silver Trust (
This is easily the most popular fund tracking silver bullion, as it
has just less than $8 billion in assets under management. The fund
has a Zacks ETF Rank of 2 (Buy), while the expense ratio comes in
at 50 basis points a year (also read
Time to Buy the Covered Call Silver and Gold
ETFS Physical Silver Shares Trust (
For a cheaper choice in the silver bullion ETF market, investors
have SIVR from ETF Securities. This product is a bit less popular
from an assets perspective though, so there may be slightly wider
bid ask spreads. Still, this ETF also has a Zacks ETF Rank of 2, so
it could be another great option in the space.
For more on silver ETFs, make sure to watch our short video on the
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SPDR-GOLD TRUST (GLD): ETF Research Reports
GLBL-X SILVER (SIL): ETF Research Reports
ETF-SILVER TRST (SIVR): ETF Research Reports
ISHARS-SLVR TR (SLV): ETF Research Reports
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