Silver’s ETF Demand Outpaces Gold by Most Ever: Chart of the Day

Silver ETF Chart

Investors in exchange-traded funds backed by silver have stayed loyal to the metal longer than those who bought gold.

The CHART OF THE DAY shows shares outstanding for the biggest U.S. silver ETF surpassing those for the nation’s largest gold fund by the most since 2006, when the iShares Silver Trust was created. Retail buyers are sticking with silver even as prices fell 4.4 percent this year, the most of any precious metal. Gold’s 2 percent gain wasn’t enough to halt declines in selling, and assets in the SPDR Gold Trust are set for a second annual loss.

“The perception is that silver will do well, and should outperform gold as the economic recovery strengthens,” Tom Kendall, the head of commodities research at Credit Suisse in London, said in a telephone interview. “Belief in silver’s dual properties, as a financial asset and also as an industrial metal, appears to remain strong.”

While money managers hold the least bullish bets on silver since they were net short on June 10, demand for the metal from solar panel makers is seen rising to a record this year by CPM Group, a New York-based researcher. Demand from jewelry and silverware makers will climb 4.3 percent, according to CPM.

U.S. economic growth will accelerate to 3 percent in 2015, from 2.1 percent forecast for this year, according to a Bloomberg survey of 89 analysts. Signs of stronger growth helped push the Standard & Poor’s 500 Index of shares to a record yesterday, while the Bloomberg Dollar Spot Index reached the highest since 2010, reducing the appeal of precious metals as alternative investments.

Buyers of silver are less swayed by price movements, because unlike gold, the metal is a “buy and hold and forget about it kind of investment,” said Kendall, the third-most accurate precious-metals forecaster tracked by Bloomberg in the eight quarters ended June 30. “It’s not so actively managed by the retail crowd. It’s tucked away as a retirement store of value or hedge against disaster.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE