Silver ETFs Surpassing Gold in Investor Interest

Recently, the spotlight in the investment world has turned to precious metals, particularly gold and silver, as investors react to renewed expectations of U.S. interest rate cuts anticipated in June

Post By : IJ News Service On 10 April 2024 8:52 AM

With lower interest rates expected, demand for gold and silver is on the rise, as these metals do not offer interest payments, making them more attractive compared to assets like bonds.

Both gold and silver are regarded as havens for investors seeking to preserve wealth during periods of economic and political uncertainty. They tend to perform well when other asset classes struggle. Factors such as the upcoming U.S. presidential election, ongoing conflicts such as the Russia-Ukraine war and the Israel-Hamas tension, further enhance the allure of these metals to investors.

In recent times, gold has been reaching new all-time highs, while silver has hit a two-year peak. The widely followed SPDR Gold Trust ETF (GLD), tracking gold bullion prices in U.S. dollars, has gained 9.3% over the past month. In comparison, the iShares Silver Trust (SLV), a popular silver ETF, has outpaced GLD, rising by 12.6% during the same period.

Other silver ETFs, such as abrdn Physical Silver Shares ETF (SIVR) and Sprott Physical Silver Trust (PSLV), have also outperformed GLD, with gains of 12.7% and 13.6%, respectively, over the past month.

Why is Silver Taking the Lead?

Silver holds an advantage over gold due to its extensive use in various industrial applications. With the global economy showing signs of improvement, industrial and manufacturing demand for silver is picking up, consequently boosting silver prices. Around half of silver's total demand comes from industrial applications, while approximately 30% stems from jewellery, silverware, coins, and medals manufacturing.

The Silver Institute forecasts 2024 to be a notable year for the metal, potentially witnessing prices reaching a decade-high. Global silver demand is expected to reach 1.2 billion ounces this year, the second-highest level on record, driven by robust industrial end-uses and a recovery in jewellery and silverware demand. The institute projects a 9% increase in silverware demand and a 6% rise in jewellery demand, with India anticipated to drive the surge in jewellery purchases. Additionally, a projected rebound in consumer electronics will further bolster the silver market.

Moreover, the global emphasis on green energy, rising demand in sectors such as 5G, a recovery in global computer shipments, and the photovoltaics (PV) and automotive industries, along with emerging demand for sensors used in IoT and OLED lighting, are expected to continue driving silver demand. Silver is extensively utilized in manufacturing solar panels and electric vehicles and is set to play a pivotal role in the transition to 5G wireless network technology.

Here are the key details of the mentioned ETFs:

iShares Silver Trust (SLV)
Offers exposure to the day-to-day movements of silver bullion prices.
AUM: $10.6 billion.
Average volume: 17 million shares per day.
Annual fee: 50 bps.
Physical Silver Shares ETF (SIVR)

AUM: $1.1 billion.
Average volume: approximately 812,000 shares per day.
Tracks silver prices, deducting Trust expenses.
Expense ratio: 0.30%.
Sprott Physical Silver Trust (PSLV)

A closed-end trust investing in unencumbered and fully allocated London Good Delivery silver bars.
Annual fees: 59 bps.
Source: Adapted from Yahoo Finance

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