A First-Place Medal For This Silver ETF, Up 280% In 2016

August 12, 2016 6:55 am
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A First-Place Medal For This Silver ETF, Up 280% In 2016

Among precious metals, it's silver that actually deserves the gold medal this year. Just look at the iShares Silver Trust (ETF) (NYSE: SLV), which is higher by nearly 44 percent compared to gains of about 26 percent for comparable gold exchange traded products.

No one is going to complain about 44 percent through seven months. Nor should they, but among all non-leveraged ETFs, the gold medal really belongs to the PureFunds ISE Junior Silver ETF (NYSE: SILJ). SILJ is easily this year's best-performing non-leveraged ETF with a gain of 280 percent. All the small-cap silver miners ETF needs to do is gain another 20 percent, sometimes that is just a few days of work for SILJ, to have quadrupled year-to-date.

Why Silver This Year?

Silver, like gold, is benefiting as investors are faced with trillions of dollars negative-yielding sovereign debt throughout the developed world. While precious metals don't have yields, leaving investors to bank on capital appreciation, no yield is better than a negative yield, the latter of which essentially ensures will lose money.

“Silver is rallying the most among major commodities this year as about $9 trillion of debt tracked by the Bloomberg Global Developed Sovereign Bond Index offer yields below zero, meaning those who buy the debt and hold to maturity stand to lose money,” according to Bloomberg.

Related Link: Gold ETF Fever: Investors Have It

As Bloomberg notes, investors are taking note of silver's rally with SILJ. Year-to-date, the ETF has added nearly $67 million in new assets, bringing its assets under management tally to almost $101 million. SILJ, the first ETF dedicated to small-cap silver miners, will turn four in November and in its almost four years on the market, at least two trends have become obvious: When silver prices spike, the ETF often outperforms to the upside.

Second, SILJ's shares outstanding often increase in unison with rising silver prices. That means the opposite scenario can potentially play out when the white metal slides.


SILJ holds 24 stocks, but three really chart the ETF's course. Couer Mining Inc. (NYSE: CDE), First Majestic Silver Corp. (NYSE: AG) and Pan American Silver Corp. (NASDAQ: PAAS) combine for about 46 percent of the ETF's weight.

Believe it or not, SILJ could keep climbing. Fundamentals bode well for silver as demand is robust, but output is falling.

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