The precious metals, especially gold and silver, have performed remarkably well in 2024, driven by lower rates and safe-haven demand. iShares Silver Trust SLV and abrdn Physical Silver Shares ETF SIVR have risen more than 33% this year, outperforming SPDR Gold Trust ETF GLD, which has gained 31.3%.
A lower interest rate environment has raised the demand for gold and silver, as the precious metals do not pay any interest, making them more appealing than alternative investments like bonds. The Fed slashed interest rates two times over the past two months, bringing down the benchmark rate to 4.5%-4.75%. According to CME Group's FedWatch Tool, traders predict a 94% chance of a 25-bps cut at the Dec. 17-18 meeting.
Both the yellow and the grey metal are considered a store of wealth for investors. They are often used as a means of preserving wealth during times of financial and political uncertainty and usually do well when other asset classes struggle. Geopolitical tensions enhance both metals’ attractiveness to investors (read: Can the Rally in Precious Metals ETFs Continue?).
Silver Continues to Have an Edge
Silver has an edge over gold, as the grey metal is used in a number of key industrial applications. As the global economy is improving, industrial and manufacturing demand is picking up, driving silver prices. About half of the metal’s total demand comes from industrial applications, while 30% comes from jewelry/silverware/coins and medal manufacturers.
Additionally, the global push for green energy, increasing demand in areas like 5G, a rebound in global computer shipments, the photovoltaics (PV) and automotive industries and new sources of demand for sensors used in IoT and OLED lighting will continue to boost silver demand. Silver is largely used for manufacturing solar panels and electric vehicles and will play a key role in the shift to 5G wireless network technology.
Thesilver marketis heading for the fourth year of deficit, with this year’s shortage seen as the second biggest ever. Per the Silver Institute industry association, the global silver deficit is expected to rise 17% to 215.3 million troy ounces in 2024, driven by robust industrial demand.
The Silver Institute predicts global demand to reach 1.2 billion ounces this year, which would mark the second-highest level on record, given the continued strength in industrial end-uses and recovery in jewelry and silverware demand. It anticipates a 9% increase in demand for silverware and a 6% rise in jewelry demand this year. A projected recovery in consumer electronics will also provide a boost to thesilver market
We have detailed the abovementioned ETFs here:
iShares Silver Trust (SLV)
iShares Silver Trust offers exposure to the day-to-day movement of the price of silver bullion. It is an ultra-popular silver ETF with an AUM of $14.8 billion and a heavy volume of 20 million shares a day. It charges 50 bps in fees per year from investors.
abrdn Physical Silver Shares ETF (SIVR)
abrdn Physical Silver Shares ETF has an AUM of $1.7 billion and trades in a good volume of around 799,000 shares per day on average. It tracks the performance of the price of silver less the Trust expenses. Its expense ratio is 0.30%.
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Free: See Our Top Stock And 4 Runners UpSPDR Gold Shares (GLD): ETF Research Reports
iShares Silver Trust (SLV): ETF Research Reports
abrdn Physical Silver Shares ETF (SIVR): ETF Research Reports
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