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A Gold Medal For This Soaring Silver ETF

by
April 13, 2016 8:40 am
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Silver prices touched five-month highs Tuesday, and that’s good news for silver-backed exchange-traded funds. For example, the iShares Silver Trust (ETF) (NYSE: SLV) is up nearly 17 percent year-to-date.

As is the case with gold, silver mining stocks and the related ETFs have a tendency to significantly outperform the metal they mine when that metal is rising. Captain John of the eponymous Captain John Charts highlighted the Global X Silver Miners (NYSE: SIL) on Benzinga Tuesday, noting, “After being at a decade long low, the Silver/S&P Ratio Chart's suggest an upward move. When this ratio of Silver is Low, S&P is at highs.”

Indeed, SIL is delivering for investors with a jaw-dropping year-to-date gain of 64.6 percent. It would appear that it would be almost impossible to find a silver ETF outperforming SIL this year. However, such an ETF does exist, and no, it is not leveraged.

Related Link: Chart Of The Day: Silver Miners Finally Getting The OK?

Hello There, PureFunds

Meet the PureFunds ISE Junior Silver ETF (FactorShares Trust (NYSE: SILJ)). All SILJ has done since the start of the year is surge 107.1 percent. Let's put that into context. There is an ETF that is essentially the double-leveraged answer to the aforementioned SLV, and that ETF is not even up 34 percent. Said another way, the unleveraged SILJ is up nearly three times as much as a double-leveraged ETF tracking silver futures.

Just 16 ETFs hit 52-week highs on Tuesday, SIL and SILJ were two of those funds. SILJ's move to a new high is particularly convincing when considering the fund jumped 2.7 percent on more than quadruple its average daily turnover on Tuesday.

SILJ's underlying index “is designed to reflect the performance of small-capitalization companies involved in the silver industry, including companies that mine, explore and refine silver. The stocks are screened for liquidity and weighted according to modified free-float market capitalization. The Index generally is comprised of 20-30 securities,” according to PureFunds.

SILJ is top-heavy, as First Majestic Silver Corp (NYSE: AG), Pan American Silver Corp. (USA) (NASDAQ: PAAS) and MAG Silver (NYSE: MVG) combine for almost 39 percent of the ETF's weight.

Image Credit: Public Domain


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