Silver investing has been dominated by the iShares Silver Trust (SLV) for a number of years now. The ETF has over $9 billion in assets and trades more than 9 million times on an average day. Its heavy popularity came from the fact that it was the first fund to to widely offer a physically-backed exposure to the precious metal, allowing investors of all kinds to make silver allocations without having to store the metal. Since inception, SLV has gained approximately 110% and recent trends in the silver market will look to further that figure [for more silver news and analysis subscribe to our free newsletter].
“At a time when hedge funds are the least bullish on silver in almost four years, investors’ holdings are near a record, siding with the analysts predicting a rally as central banks move to bolster growth” writes Nicholas Larkin. Analysts are predicting prices to climb around 18% through the fourth quarter of 2012, leaving plenty of room for SLV to make another jump higher. In fact, the total assets of all silver ETFs has grown for three straight months to $16.2 billion (meaning SLV takes a nice 55% of that pile).
But the recent silver hoarding is not the only thing that SLV has going for it, as legendary investor Jim Rogers recently touted silver over gold. Rogers noted that for the time being, silver presents itself as a better play, as it has been a slightly better performer over the past five years. He also notes that silver is the only major commodity to not reach a historical high in the recent bull market, suggesting it has room to run. Also, historically, gold has a history of being worth anywhere from 12 to 15 times silver; that figure is currently showing gold as being roughly 50 times more valuable than its counterpart metal which would suggest silver and SLV are undervalued [see also 25 Ways To Invest In Silver].
Of course, we will have to continue to add the caveat that the introduction of QE 3 would shake up the silver/gold industry as a whole. If the Fed does announce more asset-purchasing, a move that is largely expected in 2012, silver and gold prices will soar as investors will flock to these safe haven assets. The only question is whether or not you think SLV is sitting at a low, or if you will continue to wait before buying in to this ultra-popular fund.
Disclosure: No positions at time of writing.