ETF trading: Silver ETFs Outperform GLD Amid Strong Metals Rally

In etf trading, the SPDR Gold Trust ETF (GLD) has delivered an impressive performance this year, rising nearly 33%. However, this may overshadow the remarkable gains seen in silver, another significant precious metal.

According to the ETF Pulse research tool from etf.com, the Abrdn Physical Silver Shares ETF (SIVR) and the iShares Silver Trust (SLV) have both surged nearly 41% since the beginning of the year.

These substantial increases represent silver's best performance since 2020 and put these two ETFs, which provide direct exposure to silver, on track to outperform the 47% return achieved in 2020.

“Silver is playing catch-up with gold, which is a typical pattern,” noted Paul Schatz, president of Heritage Capital in Woodbridge, Connecticut.

Silver ETFs Rise Nearly 41% in 2024

Silver is making impressive gains this year, closely following gold's lead. The SPDR Gold Trust ETF (GLD) is experiencing its best year in over a decade, driven by factors like geopolitical tensions, inflation concerns, and robust central bank purchases.

Traditionally not viewed as an inflation hedge, silver is benefiting from many of the same influences boosting gold, along with increased industrial demand and supply shortages. Paul Schatz, president of Heritage Capital, describes silver as “higher beta and more speculative” compared to gold. Currently priced at $33 an ounce, silver remains about 34% below its peak of $50 reached in 2011. Schatz anticipates that silver could at least test, if not surpass, that peak in a speculative surge, and he would consider buying during price pullbacks.

However, some investors remain cautious. Tim Holsworth, president of AHP Financial, noted, “Metals are too difficult to keep tabs on; they are just too volatile to be added to our models.”

In terms of inflows this year, GLD leads the commodities sector with over $2 billion, followed by the iShares Silver Trust (SLV) at $1.4 billion. The lower-cost SPDR Gold MiniShares Trust (GLDM) ranks third with $869 million in inflows through October.

What Makes Silver an Attractive Investment?

Silver has garnered significant interest as a precious metal investment globally. In September 2024, the U.S. Federal Reserve cut the benchmark interest rate by 50 basis points due to concerns about the job market and in anticipation of the upcoming presidential elections. Further rate cuts are expected in the coming months, enhancing silver's appeal by reducing its opportunity cost. Additionally, ongoing geopolitical tensions may lead risk-averse investors to seek refuge in safer assets like silver.

A considerable share of silver demand comes from industrial applications, thanks to its unique characteristics such as high conductivity, malleability, and corrosion resistance. The growth of environmentally-friendly manufacturing has further boosted industrial demand for silver, especially in the electronics and green technology sectors. As sustainable practices become increasingly prioritized, the demand for silver in these applications is anticipated to rise. This growing demand, combined with supply constraints stemming from challenges in mining and refining, is likely to drive silver prices higher.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.