Silver has been on a hot run of late, to say the least. And as gold consolidates a bit in a “sideways correction” of sorts, questions linger as to just how much the often-neglected shiny metal can outrun gold as we enter the second half. Indeed, silver has seemed mostly undervalued compared to gold in recent years, with the latter drastically outperforming the former over rising macro headwinds and other unknowns (think tariff risks and recession fears).
Though silver is an industrial metal that moves in a very different way, I still think it’s not too late to add to your exposure if you haven’t done so already. While silver isn’t the same sort of “safe haven” as gold, investors seeking lowly correlated gains may wish to consider a few options to play the metal as it heats up for the summer season. As always, silver and most other commodities are nearly impossible to forecast. So, unless you’re a long-term thinker who’s looking to beef up your portfolio’s diversification, investors should play it cautiously if they’re thinking about chasing the new, red-hot metal on the scene!
Year to date, the iShares Silver Trust (NYSEARCA:SLV), one of my preferred ways to invest in and watch physical silver, is up a lofty 23%, topping the S&P 500 and TSX Index by a fairly wide margin. Much of the big gains have come over the past month, with silver rising close to 13% over this period. Indeed, that’s a melt-up that few folks saw coming. And while some of the easy gains may already be in the books, I continue to find silver a tad cheaper than gold, especially as the gold trade runs out of steam and the silver trade regains more of its lustre.
In this piece, we’ll check out one way to play the rising price of silver as technical momentum builds while perceived undervaluation relative to gold (some like to view the gold-to-silver ratio, which is still on the high side of the historical range) paints a pretty picture for value-minded investors.
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iShares Silver Trust
First up, we have the silver standard for betting on bullion, the iShares Silver Trust, or the SLV as it’s best known by investors. It’s a pretty quick and easy way to bet on silver without having to stock up on the coins while paying up a hefty premium to do so. The only knock against this ETF for Canadians?
It’s in U.S. dollars, so you’ll need to swap your loonies for greenbacks. With recent weakness in the U.S. dollar, though, I do think investors looking to take advantage of the relative strength in the Canadian dollar may wish to do so by picking up a few shares of the SLV ETF. In any case, the liquidity levels of SLV are top-notch, making it a fine first choice for those who value liquidity and relatively low fees. While the 0.5% expense ratio isn’t the lowest in the world, it is quite a bit (around 0.1% or so) lower than comparable offerings out there.
As always, do put in the homework and ask yourself why you want to add silver to your TFSA? Is it for a quick gain? Diversification? Or perhaps above-average appreciation over the long haul? Either way, silver has shone brighter than gold in the past week.
