The period of seasonal strength for silver is approaching. Investors can participate by choosing between a wide variety of exchange traded funds.
From Sept. 16th to April 11th, the trade has been profitable in 11 of the past 14 periods. Average return per period was 31.5 per cent.
By far the most actively traded silver ETF is the Silver Trust . Units are backed by silver bullion. Management expense ratio is 0.50 per cent.
ETF Securities also offers a silver-bullion backed ETF. Physical Silver Share has a management expense ratio of 0.30 per cent.
PowerShares offers the DB Silver Fund . Units are backed by silver futures contracts. Management expense ratio is 0.50 per cent.
Horizons offers the Horizons COMEX Silver ETF . Units are backed by silver futures contracts, trade in Canadian dollars and are hedged against U.S. currency risk. Management expense ratio is 0.65 per cent.
Leveraged ETFs backed by silver futures contracts also are available on U.S. and Canadian exchanges. In the U.S., ProShares offers the Ultra Silver ETF , a unit that tracks twice the daily upside performance of silver. ProShares also offers the Ultra Short Silver ETF , a unit that tracks twice the daily downside performance of silver. Management expense ratio for both is 0.95 per cent. Horizons offers the BetaPro Silver Bull+ ETF , a unit that tracks twice the daily upside performance of silver. It also offers the BetaPro Silver Bear + ETF . Management expense ratio for both is 1.15 per cent. Both are hedged against U.S. currency risk.
A silver equity unit also is available in the U.S., the Global X Silver Miners ETF . Units track a diversified basket of 25 silver stocks, shares of the largest silver producers in the world. Content includes Pan American Silver, Silver Wheaton, Hecla Mining, Silvercorp Metals and Silver Standard Resources. Management expense ratio is 0.65 per cent.
On the charts, silver at $43.26 (U.S.) has a positive technical profile. Intermediate trend is up. Silver trades above its 50- and 200-day moving averages. The metal recently bounced from near its 50-day moving average currently at $39.03 per ounce. Strength relative to the S&P 500 Index has been positive since the beginning of July. Strength relative to gold has been positive since the beginning of August. Short-term momentum indicators currently are slightly overbought.
Preferred investment strategy is to purchase a silver ETF on weakness closer to its 50-day moving average, as silver’s period of seasonal strength approaches. Selection of the ETF depends upon your personal investment profile.
Don Vialoux is author of a free daily report on equity markets, sectors, commodities and Exchange Traded Funds. Reports are available at www.timingthemarket.ca . Mr. Vialoux also is research analyst for JovInvestment Management Inc.