Gold is still commanding most of the attention in the commodities space. Meanwhile, the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver, are trading slightly lower to start 2020.
However, some market observers believe silver is poised to shed its laggard status and join gold and palladium on the precious upside.
“Silver has fared better than some of its metal peers against the backdrop of a disease-threatened global economy, in part because of its dual role as both a precious and industrial metal,” reports Myra Saefong for Barron’s. “Futures prices for silver, which settled at $17.497 an ounce on Feb. 12, have fallen by more than 2% this year. Silver hasn’t done as well as gold, which has seen futures prices rise by roughly 3% over the same period.”
With the strong showing in equities as of late, it seems that precious metals like silver have fallen to the wayside when it comes to capital allocations, but technical levels show that a rally could be brewing for silver bulls.
Shiny Bold Ideas
Traders looking to amplify gains with silver can be considered geared products, such as the VelocityShares 3x Long Silver ETN Linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV) and the ProShares Ultra Silver (NYSEArca: AGQ).
USLV seeks to replicate, net of expenses, three times the S&P GSCI Silver Index ER. The index comprises futures contracts on a single commodity. The fluctuations in the values of it are intended generally to correlate with changes in the price of silver in global markets.
AGQ seeks daily investment results that correspond to two times (2x) the daily performance of the Bloomberg Silver SubindexSM. The fund seeks to meet its investment objective by investing, under normal market conditions, in any one of, or combinations of, Financial Instruments (including swap agreements, futures contracts, and forward contracts) based on the benchmark. The types and mix of Financial Instruments in which the fund invest may vary daily at the discretion of the Sponsor.
“This year, the market is likely to see continued growth in physical silver investment and in the commodity’s use as an industrial metal, according to The Silver Institute’s recently released views on the 2020 global silver market,” reports Barron’s.
For more on alternative strategies, visit our Alternative Investment Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
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