Silver Acting Like ‘Gold on Steroids’ as Assets Near Record High

  • ETFs backed by silver have seen assets increase for 8 days
  • Prices are up 25% in 2016, tracking similar rally in gold

For all the concerns whether the rally in precious metals will last, investors are close to making the biggest bet ever on silver.

Silver funds have taken in a wave of new cash this year and assets are approaching an all-time high. Prices are up 25 percent in 2016, tracking a similar rally in gold on speculation the Federal Reserve will hold off on raising interest rates.

“We’re still seeing big chunks of managed money coming into the silver market,” Adrian Ash, head of research at online-trading service BullionVault, said by phone from London. “Inflows from our clients match those at the all-time highs of early 2011.”

“Silver has gone mental as it sometimes does,” he said. “It’s gold on steroids.”

Silver is often used as a more volatile play on gold’s inflation and risk-hedging properties. The performance this year has beaten other precious metals -- gold, platinum and palladium. While silver funds have seen a surge in popularity, they’re still a tiny part of the market compared to gold.

Silver Funds

Total holdings are worth about $11 billion, according to data compiled by Bloomberg. That’s just 15 percent of the amount invested in bullion funds.

Exchange-traded funds backed by silver have seen assets increase for the past eight days, rising within 0.6 percent of a record reached in 2014, according to data compiled by Bloomberg as of Wednesday. ETF holdings of the metal are up 6.4 percent this year to 20,067 metric tons.

Silver futures for July delivery advanced 1.7 percent to settle at $17.268 an ounce at 1:40 p.m. on the Comex in New York. The 25 percent gain this year outpaces gold’s 20 percent rally.

“We’ve seen a lot of interest in general coming back into the precious metals space,” said Andrew Chanin, the chief executive officer of PureFunds, which offers exchange-traded products. “A lot of people are looking at silver as something that could potentially benefit not only from increased interest in precious metals, but also because it has such a strong industrial demand.” 

Purefunds offers the PureFunds ISE Junior Silver Small Cap Miners ETF whose shares outstanding almost quadrupled this year.

In other metals markets:

  • Gold futures for August delivery gained 0.8 percent to $1,272.70 an ounce on the Comex.
  • Palladium and platinum futures slipped on the New York Mercantile Exchange.
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