Rogers Prefers Silver Over Gold

New York (Jan 19)  Exchange traded funds backed by physical silver lagged their gold rivals last year and that is saying something. During 2013, the end to gold’s 12-year bull market, the SPDR Gold Shares (NYSEArca: GLD) lost 28.3%, but the iShares Silver Trust (NYSEArca: SLV) was far worse with a drop of 36.3%.

As precious metals have rebounded a bit in 2014, SLV, with a gain of 4.3%, has a slight edge over GLD and the gold fund’s 4.1% pop. Some noteworthy investors see silver continuing to outpace gold this year.

“I would prefer silver to gold. I am not buying either at the moment. Silver is down 60% from its all-time high, gold is down 30-35% from its all-time high. But i won;t buy just because they are down,” famed commodities investor Jim Rogers told the Economic Times.

“There are huge shorts that have developed in precious metals as you know. So, it’s overdue for a rally. We had a big drop in 2013. Everybody got negative, everybody got short. So, we are going to have a rally,” added Rogers.

The idea of extreme negative sentiment in the precious metals complex, toward both the commodities themselves and the miners that extract the metals from the earth, has been highlighted by other market observers with at least one noted technical analyst saying the extreme negative sentiment against gold miners seen late last year was as bad as it has been in three decades. [A Generational Opportunity in Gold Miner

But as that technical analyst noted, miners rallied 30 years ago when faced with extreme negative sentiment and that is happening again this year. Five of the top-11 non-leveraged ETFs to this point in 2014 are mining ETFs, a group led by the PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF (NYSEArca: SILJ), proving that silver miners are outpacing their gold brethren as well.

Silver stocks strengthened after strong guidance numbers, and miners are expecting higher production numbers this year. Many silver companies are increasing production to help offset lower silver prices. For instance, Endeavour Silver (NYSE: EXK) reported a record silver production for the fourth quarter. [Silver Shines as Miners Lead]