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Why investors like silver more than gold
By marketwatch.com
SAN FRANCISCO (MarketWatch) — Investors have taken a big interest in silver lately and their infatuation looks set to continue this year, despite gold’s advance.
True, both metals haven’t done very well most recently, posting losses in five out the last six sessions, but a big-picture view on prices and exchange-traded funds shows just how much silver’s turning heads.
In August, gold futures climbed more than 6% and since the end of June, they are up about 12%. Those figures pale in comparison to the 20% increase in silver futures for last month and quarter to date.
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Focus on funds: Silver rising
The economically sensitive metal headed higher, thanks in part to news from China. Also: Frontier markets are having a good year, and a new way to invest in hedge funds.Silver’s also set for the first quarterly gain since the third quarter of last year.
“Given the outperformance in silver over gold, we can assume that there are factors in play other than traditional safe-haven demand,” said Tom Lydon, editor and publisher of ETFtrends.com.
Silver exchange-traded funds were the best performing ETFs in August, Lydon said in a report this week, noting that they were bolstered by bargain-hunting speculators as well as by escalating geopolitical tensions surrounding Syria.
The physical-silver-backed iShares Silver Trust SLV +2.64% saw net fund inflows of $88.2 million last month as of Aug. 30, according to IndexUniverse. That compares with gold-backed SPDR Gold Trust’s GLD +1.48% fund outflows of $227 million as well as outflows of $15.9 billion among U.S. equity funds and $6.66 billion among U.S. fixed-income funds, IndexUniverse data show.
“Psychologically, the slow money likely sees SLV as more attractive than GLD for the simple fact that it hasn’t been talked about for the past half decade,” said Adam Koos, president of Libertas Wealth Management Group. “People like new and exciting, and gold might be [psychologically] becoming old hat to some,” he said. “It also goes without saying that the price per share is cheaper when buying SLV.”
Broad demand
But demand for silver is broader than that.
“For investors, silver is much more of an industrial material than gold and accordingly has potential double benefits from both industrial and investment demand,” said Michael Haynes, chief executive officer at online precious-metals dealer APMEX Inc.
The U.S. Mint said sales of its American Eagle silver bullion coins remain “brisk.” They’re up about 45% year to date, compared with the same period last year, according to spokesman Michael White.
The Mint sold a total of nearly 39 million of those one-ounce coins in 2011, which was its record for a single calendar year. So far in 2013, the Mint accepted orders for more than 33 million coins. At the current demand pace, the Mint will set a new record for sales this year, White said.
APMEX.com
Silver’s much more affordable than gold for individual investors, and their interest is in holding physical silver, according to Edmund Moy, chief strategist at gold-backed IRA provider Morgan Gold.
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