Silver ETFs Try to Catch up to Gold Rivals

October 5, 2017

New York (Oct 5)  The iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR), which are backed by physical silver bullion, have struggled in recent weeks with each shedding more than 6% over the past month.

However, some commodities market observers believe the white metal can catch up to gold.

Still, the major silver exchange traded funds face some technical challenges. The recent declines have SLV and SIVR trading below their 50- and 200-day moving averages. SLV and SIVR are up just 4% year-to-date.

Silver could get another boost if gold prices start rebounding in earnest. Indian demand is vital for gold because the country is the second-largest buyer of the yellow metal behind China. India, one of the world’s largest gold consumers, could be set to lower its import tax on bullion, which could be major catalyst for gold prices.

Whilst demand for silver coins in the US has been weak, there are some indicators that suggest this physical demand is beginning to pick up, alongside industrial demand. For example, there has been robust silver ETF demand and in September there was significant uptick in those taking immediate delivery on COMEX,” reports ETF Daily News.

Even if safe-haven demand for hard assets abates, silver exchange traded funds could continue to find support out of the industrial sector as the precious metal is a major component in many manufactured products.

As the solar panel industry expands, silver will also enjoy greater industrial demand. Global solar photovoltaic annual installed capacity is expected to hit 112 gigawatts by 2021, with cumulative increase in solar electricity capacity of 506 gigawatts over the next five years, according to GTM Research.

“In 2010 the two markets combined accounted for 1,200t. By the end of the decade the Silver Institute believes ‘the market will expand further to around 109Moz (3,400t), driven largely by healthy economic growth,’” according to ETF Daily News.

In the third quarter, investors pulled almost $222.6 million from SLV while SIVR saw modest inflows.


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