As the global economy continues to trudge forward, precious metals have taken quite a hit. Much ado has been made about gold prices making fresh lows and when the right time is to buy the yellow commodity, but its sister metal, silver, has been somewhat overshadowed, as it too has been faced with a fair amount of selling pressure. This year alone, silver prices have dipped over 11%, with a fair amount of that drop coming in just the last few days [for more silver news and analysis subscribe to our free newsletter].
Silver Hitting Lows
Silver prices are at their lowest levels since July 2012, as they fell below the $27 threshold late last week. The iShares Silver Trust (SLV), one of the most popular instruments for silver exposure, is at its lowest level since November 2010. The last week has only seen the pressures to sell increase as an interesting phenomenon has been developing in the precious metals world.
As the Cyprus scare has knocked some volatility into the market, precious metals have actually performed quite poorly despite their usual safe haven appeal. This is a bad sign for short term precious metal prices because it signifies that at this time, traders do not feel that gold and silver offer safety from the instability currently in the global market. But silver, being a more practical and useful metal than its yellow counterpart, has another factor weighing against it [see also 25 Ways To Invest In Silver].
The industrial world has been relatively sluggish as of late and has hid behind some of the strong gains seen in the housing market. According to Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, “silver is suffering because of weak industrial demand. Prices may continue to remain under pressure.”
The Best Ways To Invest in Silver
There are a number of options out there that allow traders to execute both bearish and bullish positions in the white metal. Below, we outline three of the best methods for establishing a position in silver.
- COMEX Futures: Without a doubt the most direct method of obtaining silver exposure is to utilize the futures market. The COMEX offers e-mini, miNY and regular silver futures contracts, each representing a different amount of the metal.
- iShares Silver Trust (SLV): As mentioned above, SLV is one of the most popular ways for investors to obtain silver exposure. The fund, which is physically-backed, has over $9.6 billion in assets and trades more than 7.5 million shares each day. The fund also has a very active options market for traders who prefer that route.
- 3x Long Silver ETN (USLV)/3x Inverse Silver ETN (DSLV): This bull/bear pair can be dangerous in the wrong hands, but for traders who fully understand and appreciate these 300% leveraged ETNs, they can turn some handsome profits. For those who have strong feelings as to which way silver is going to move in the short term, these funds deserve a closer look.
Disclosure: No positions at time of writing.