Is Silver The Way To Go?
After HSBC came out with a huge warning on a potential upcoming US stock market crash, is it wise to put some eggs into the silver basket? Is Silver the way to go?
Many of us already have some investments in precious metals, which quite honestly have not performed to expectations. Inflation simply has not been strong enough (at least according to the FED). However, if the market does take a prolonged, or sharp fall, silver and gold stocks, especially those companies who are producing, could see a strong uptrend. The cost of mining may have come down somewhat, with diesel fuel costs much lower than in previous years (thanks to crude prices near $50), many producers may see somewhat better profit margins. But…
Sifting through the SEC filings of all these companies can be quite a headache. Listenting to pundits can be even more frustrating. So unless you are a professional investor, or you have an honest advisor, the simplest way to invest may be in ETF’s.
Today, we’ll look at a silver ETF, the iShares Silver Trust (SLV)
According to Yahoo! Finance, “The Trust seeks to reflect generally the performance of the price of silver. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Trust is not actively managed. It does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of silver. The Trust receives silver deposited with it in exchange for the creation of Baskets of Shares, sells silver as necessary to cover the Trust expenses and other liabilities and delivers silver in exchange for Baskets of Shares surrendered to it for redemption.”
Over the past 5 years, SLV has gone from highs around $34, to lows around $13. Currently, the ETF is trading near $16.50. So we are actually near the 5 year lows…
Have a look at the chart:
The longterm downtrend has clearly been broken back in the late spring. If HSBC is right, we could see SLV head back north towards those highs.
Clearly there are producers out there that may skyrocket much higher than the ETF, but the relative safety of the ETF may just be the safer bet.
So is silver the way to go? Only time will tell. Unfortunately there is no such thing as a crystal ball for the markets.
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Is silver the way to go?