Betting On The Silver ETF Could Make Investors Rich

“It might be referred to as “poor man’s gold” but a lot of investors are betting silver could make them rich,” Josh Lipton Reports From Minyanville.

Silver has shined in the past few weeks. The metal settled last Friday at $17.065 an ounce. That’s up 16.56% since its February 5 low of $14.64, according to Bloomberg data.

The precious metal retains dual attractions to investors, says Jeffrey Christian, the managing director at CPM Group: “Silver is a financial hedge like gold,” he tells us, “but it is also an industrial play.” Let’s talk about investment activity first: Demand for silver exchange-traded funds, although it’s come off a bit in the past couple weeks, still looks strong, according to Christian.

He tells us that global ETF holdings have increased to 438 million ounces since the first silver ETF launched in April 2006. Looking ahead, Christian expects investors to stay pretty interested in lining their portfolios with some silver. “The additions last year to ETFs were on the order of 150 million ounces,” he says. “I don’t know that this year will be as strong as 2009, but we do expect it to be relatively strong.” Christian says he expects silver to average $17.24 this year, up from $14.67 in 2009.

“The iShares Silver Trust (SLV) is up 10% in the past month. The stocks of some mining-related companies have also enjoyed big runs to the upper right hand corner of the chart: Pan American Silver (PAAS) is up 56% in the past 12 months; Silver Wheaton (SLW) is up 135%. Investors, by adding a dash of silver to their holdings, are also making a bet on the global growth story, given the metal’s many industrial applications,” Lipton Reports.

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Here are some details on the iShares Silver ETF (SLV):

The objective of the investment (SLV) 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.

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