With the recent issues with European and US debt, lot of investors are seeking security in precious metals. As the gold prices have made a real hike in the past few years, the silver is now the new focus of lot of investors.
One of the reasons why investing in precious metals, like Silver ETFs for example, is that they are actually backed by real physical metal which is stored by a custodian (usually a large and credible bank like HSBC or JPMorgan).
While gold has mostly decorative value, silver is known to be more versatile- it has always been an essential metal for the industry with variety of uses in manufacturing and industries.
The first Silver ETF fund was launched by iShares called the iShares Silver Trust (SLV) listed in the NYSE in 2006. It was a highly anticipated ETF which rose up to 8% on its first day of trading because the investors found a new way to capitalize on silver. It is now the world’s largest silver backed ETF with total assets of more than $12 billion. It holds almost 10,764 metric tonnes of silver.
Silver ETF funds are a good investment right now because it can be hedged for inflation and overall uncertainty of the global economy. Silver also has a wide range of uses to build up infrastructure. The considerably better player in the ETF market includes the following:
- ProShares Ultra Silver (NYSEArca: AGQ): This silver ETF fund has a market capitalization of $1.08 billion. It has an expense ratio of 6.65%. This is the second well performing ETF after the SLV. It seeks to provide twice the return of silver bullion in a single day.
- Global X Silver Miners (NYSEArca: SIL): SIL has a market capitalization of $493 million with an expense ratio of 0.56%. It tracks the performance of Solactive Global Silver Miners Index. It has holdings in 25 companies with highest allocation in Wheaton Corp. of 14.77%, Fresnillo of 14.5% and in American Silver Corp. of 11.24%.
- PowerSharesDB Silver (NYSEArca: DBS): DBS tracks the DBIQ Optimum Yield Silver Index Excess Return. It has a market capitalization of $158 million with an expense ratio of 1.5%.
- ETFs Physical Silver Shares ETF (SIVR): total assets of this silver ETF fund are about $635.7 million. It has an expense ratio of 0.3%. This is also a well performing ETF with HSBC Band USA as its custodian.
Silver ETF funds did suffer a crash in spring of the year 2011 but as speculations are removed from the market the ETFs are again soaring as the global debt and industrial demands boost the prices of silver. It is currently pushing above its moving average and gaining good percentage in premarket trading. The gold/silver ratio also fell earlier in 2011 as silver outperformed the other metal. Silver ETFs are clearly benefitting the investors with this price surge as silver is gaining greater affordability and attracting investors to play safe in uncertain times. It was the top performing ETF category of 2010. It is definitely recommended for people planning to leverage from rising metal demand.