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Silver ETFs on track to outshine peers in 1Q15

Silver ETFs on track to outshine peers in 1Q15
March 31
04:34 2015

Silver-backed exchange-traded funds (ETFs) are on track to close a successful first quarter of 2015, as precious metals in general suffer from the effects of a stronger dollar. However, silver ETFs are still well in the red on an annual basis and with the Federal Reserve on track to hike borrowing costs later this year, precious metals are likely to experience a bumpy ride.

As of March 27, the biggest US silver ETF, the iShares Silver Trust (NYSEARCA:SLV), had gained 7.7 percent year-to-date, though it was still some 15 percent down year-on-year. The two other major silver ETFs, ProShares Ultra Silver and Silver Trust, have added 13.6 and 8.1 percent, respectively, since the start of 2015. As with the iShares ETF, both funds have suffered big losses over the past year, losing 32.7 and 14.6 percent, respectively.

Meanwhile, the top gold-backed ETF, the SPDR Gold Trust (NYSEARCA:GLD) has added just 1.3 percent this calendar year and is down 7.6 percent annually.

Silver for immediate delivery had shed three cents of its value, or 0.18 percent, to $16.87 per ounce as of 07:19 BST today, while gold was down $9.25, or 0.77 percent, at $1,188.83.

On the commodities markets, silver is generally viewed as the more volatile peer to gold, following the yellow metal’s direction, but with greater momentum. Silver has regained some ground after last year’s slump on the strengthening dollar, while gold is even lower than at the start of the year, though both experienced a very volatile three months.

However, investors are almost certain that the Federal Reserve will hike central lending rates in 2015, a move which would see the dollar surge again and interest in havens plummet. Most analysts have shifted expectations for a hike towards September, though some are still considering the move would take place as soon as June. Investors are now eyeing Friday’s release of US payrolls data, a key metric of the labour market, closely monitored by the Fed.

The US Dollar Index, which measures the greenback’s strength against six other major currencies, is up more than six percent this year, and has gained over 20 percent on an annual basis.

“Precious metals are consolidating with prices under pressure as the dollar has firmed, the exception is palladium that has extended lower,” FastMarkets analyst Will Adams said today. “For now we would not be surprised to see further weakness across the complex, but we would watch the dollar closely.”

Source: Veselin Valchev

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Veselin Valchev

Veselin Valchev

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