Most of the attention in the exchange-traded product market is focused on gold, with no less than 23 ETFs tied to the yellow metal. Although even the biggest silver ETF receives less overall interest among investors, such funds have been some of the most widely traded shares over the last several months. Volumes have consistently been about 5 million per day, with some trading days seeing as many 15 million shares changing hands during December.
Major Silver ETFs
Chief among the exchange-traded funds backed by silver is the iShares Silver Trust (NYSE:SLV). It dwarfs the other ETFs that track the silver price with its $5 billion market capitalization, and is traded in far higher volumes.
Year-to-date, the silver ETF SLV has lost more than 12% of its value. This is far less than comparable ETFs for the Platinum Group Metals; at the same time, it is worse than the major gold ETF, the SPDR Gold Trust (NYSE:GLD). Thus far, GLD has “only” lost about 10% in 2015. The platinum and palladium funds have fared far worse for the simple reason that these two metals are closely tied to heavy industry and have seen their prices plummet as the global economy has slowed down. It is some consolation (and evidence of silver’s appeal as an investment metal) that silver also is used extensively in industry but has mirrored the gold market more closely. One consideration is that silver is used in many industries, and this use is widespread; platinum and palladium, on the other hand, are almost exclusively confined to a single industry (automobile manufacture) and are more difficult to extract from mines.
Today, SLV is down another 3%. The chart below shows its uneven path over the past month alone.
The story is much the same with each smaller silver ETF. In terms of market cap, none of the following funds surpass $250 million, and their trading volumes average in the tens of thousands rather than multi-millions.
The Silver Trust ETF (NYSE:SIVR) fell in tandem with SLV on Monday, losing more than 3%.
The ProShares Ultra Silver ETF (NYSE:AGQ), which is double-leveraged, fell by about twice as much as SLV and SIVR on Monday, slumping 6%.
The Credit Suisse VelocityShares 3x Long Silver exchange-traded note (NASDAQ:USLV) is actually triple leveraged relative to SLV and SIVR, which brought its losses to 9% on the day.
Inverse Silver ETF Success
There is another class of ETFs that allow investors to essentially short the price of silver. Known as an “inverse silver ETF,” these types of funds have performed well with the drop in silver prices. Understandably, they are not nearly as popular or large (in terms of market cap) as any regular silver ETF, but they have gained momentum recently. The two main funds in this category are the Credit Suisse VelocityShares 3x Inverse Silver ETN (NASDAQ:DSLV) and the ProShares UltraShort Silver ETF (NYSE:ZSL). On Monday, they gained over 9% and 6%, respectively. Each inverse silver ETF surged during November, as well.
In some sense, the real big winners due to the drop in silver prices, however, have been bullion buyers who can now stack more of the metal for less.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.