Why Silver Shines

Date: February 15, 2017      Publication: Bottom Line Personal      Source:  Neena Mishra, CFA, Zacks Investment Research      Print:

The precious metal most likely to glitter is…silver. Historically, gold and silver both have been considered safe havens for investors during times of extreme economic turmoil and high inflation. Neither condition exists right now, which is one reason why the price of silver fell 23% from its August 2016 high to about $16 an ounce in December. That’s 70% below the record high that silver prices hit in April 2011.

However, there are catalysts that may help silver outperform gold. Some analysts predict silver prices will rise 20% over the next two years. That’s because globally, half of all silver bullion produced is used in manufacturing. The electronics and solar-panel industries that use this silver are expected to grow strongly, further increasing demand.

Also, the world silver supply has been shrinking. Aging mines have been producing less, and there has been less exploration for new mines amid weak prices.


My favorite ways to invest in silver now…

  • ETFS Physical Silver Shares ETF (SIVR). This exchange-traded fund (ETF) allows you to closely track the price of silver without the logistical problems of buying and storing actual bullion. Its shares are backed by silver bars held in vaults in London and audited regularly. Important: Physical silver is considered to be a “collectible” by the IRS even in an ETF. When shares of this fund are sold, long-term capital gains are taxed at 28% (or according to your tax bracket if lower) rather than at the 0%, 15% or 20% rate that applies to stocks.
  • Global X Silver Miners ETF (SIL) tracks the stock performance of 24 of the largest silver-mining companies. It’s best for aggressive investors because shares of these stocks tend to be far more volatile than silver prices.

Source: Neena Mishra, CFA, ETF research director at Zacks Investment Research, Chicago.