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Silver jumped to a record $51 an ounce this week, a psychological level for investors, and is boosting silver ETFs anew. As supply dwindles and lease prices skyrocket, ETFs are emerging as the leading method of obtaining exposure to the metal.
The world’s largest silver ETF, the iShares Silver Trust (NYSE:SLV), has risen almost 70% year to date, including a 21% increase in the last month alone. The fund is up 1.6% Friday as of time of publishing. With a 0.5% expense ratio, this fund seeks to track the daily performance of the price of silver bullion.
Alternative options like Aberdeen Standard Physical Silver Shares ETF (NYSE:SIVR) and Sprott Physical Silver Trust (NYSE:PSLV) expose investors to a closer correlation with physical holdings, diversified choices in the ETF universe. Both are up almost 70% YTD. On Friday, the funds were up more than 2% and 1.5%, respectively.
For cost-conscious investors, SIVR is the cheaper bet, with an expense ratio of 0.3%, whereas PSLV charges 0.57% as expenses.
Also Read: Gold Retreats Below $4,000, But Silver’s Record High Keeps Precious Metals ETF Investors Engaged
The silver market is strained, with London’s one-month lease rates surging to 39.2% as an indicator of acute shortage of deliverable metal. Saxo Bank head of commodity strategy Ole Hansen said that the silver market is exhibiting obvious signs of stress in the face of acute physical tightness. The condition is rendering short positions expensive and rewarding ETF holders who had gone long to ride out the rally.
Investors benefit from the ease of gaining exposure through silver ETFs, sidestepping the intricacies of the physical market. With SLV’s liquidity through SIVR and PSLV’s physically supported scaffolds, investors can position themselves during supply shortages and increased volatility. With demand overcoming supply, silver ETFs stand to ride a possible breakout from a long-term trading range.
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