Market Overview

No Second-Place Medal For This Silver ETF

No Second-Place Medal For This Silver ETF

With the Summer Olympics right around the corner, the public will be reminded of another slight to silver: It is the medal awarded to second-place finishers in various events. In the investment world this year, silver is far from a runner-up.

Talk About Some Awesome Returns

The iShares Silver Trust (ETF) (NYSE: SLV) is up 42.1 percent, while the SPDR Gold Trust (ETF)(NYSE: GLD) is up “just” 26.6 percent. Large discrepancies are seen with gold and silver mining exchange-traded funds. For example, the largest silver miners ETF is up 148.2 percent this year, while the largest gold miners ETF is higher by 111.7 percent.

Those are terrific returns, but they do not impress relative to the PureFunds ISE Junior Silver ETF (FactorShares Trust (NYSE: SILJ)). In their hurry to get to the Hamptons last Friday, perhaps some traders did not notice SILJ was one of 163 ETFs to hit a 52-week high. Apparently, some did notice, because SILJ more than 8 percent on nearly triple the average daily volume.

Related Link: Silver Will Become Hot Commodity Amid Market Uncertainty

Think Again Before Betting Against Metals

As has been the case for all of 2016, betting against precious metals ETFs has been fool's gold (or silver) and data suggest silver has more near-term upside. Of course, that is music to SILJ's ears.

“Bullion has benefited as the post-Brexit vote turbulence in financial markets added to speculation that global central banks may act to boost stimulus, with interest rates in the U.S. set to remain low. Holdings in silver-backed exchange traded funds expanded to a record last month, and assets in gold ETFs are now at the highest since August 2013,” according to Bloomberg.

Trend Bodes Well For SILJ

With investors pouring into silver and no signs of that trend of abating, that signals more bullishness for SILJ. That after the ETF has already more than tripled this year, ranking it as 2016's best-performing non-leveraged ETF.

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.

Demand trends also bode well for SILJ and its holdings. The U.S. Mint is currently boosting production of silver coins due to increased investor demand and industries, such as healthcare and technology, are expected to more than triple nanosilver demand over the next seven years.


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