Gold has gotten a lot of attention over the past year as a safe haven during volatile stock markets. But the other precious metal, silver, has actually been a better investment. Over the past year, the price of silver has increased 126% to roughly $74.42 as of April 23. Thatʻs a better return than Nvidia (up 84%) or Broadcom (up 119%) had over the past year.
It is also better than gold, which is up roughly 40.5% over the past 12 months.
Silver surged to a record high of $121 per ounce in late January, fueled by industrial usage for solar panels, consumer electronics, 5G technology, data centers, electric vehicles, among other applications. But it crashed after its late January high due to a variety of factors, including supply constraints and the announcement of Kevin Warsh as the new Fed chair.
Warsh is seen as an inflation hawk, which reduced expectations for rate cuts and points to a stronger U.S. dollar. A stronger dollar, in turn, would make silver less attractive versus interest-yielding investments, lowering demand.
Image source: Getty Images.
Despite the massive sell-off, fears about Warsh as a rate hawk could be overblown, as he has not made a commitment one way or the other on rates.
Analysts at JPMorgan Global Research forecast silver at around $81 per ounce at the end of the year, 8.8% above the current price. Thatʻs likely due to industrial demand for silver remaining fairly high throughout the year, and to geopolitical conflicts that are creating continued market uncertainty.
Investing in the SLV ETF
With its approximately 40% dip since late January, this may be a good time to invest in silver again, particularly as silver remains a safe haven from volatile stock markets. And with Warsh likely to get Senate approval to take office in May, investors will soon get a better idea where the new Fed chair stands on rates.
The best way to invest in silver, particularly for the average investor who is not an expert in precious metals, is through a silver ETF. One option favored by many investors is the iShares Silver Trust (SLV +3.21%), the largest silver ETF with some $36 billion in assets under management.
Today’s Change
(3.21%) $2.14
Current Price
$68.80
Key Data Points
Day’s Range
$67.51 – $69.65
52wk Range
$29.04 – $109.83
Volume
969K
The ETF is built to track the price of silver. Like silver, it has returned about 124% over the past 12 months. Year to date, impacted by the January sell-off, the ETF is up just 3.5%.
Over the past five years, SLV has had an average annualized return of 22.4%, and over the past 10 years, it has returned about 14.7% per year. It has been an excellent diversifier as it tends to do well when the stock market doesnʻt. For example, during the 2022 bear market, SLV was up about 3%.
Also, with a beta of 0.55, it is considerably less volatile than the overall market.
Thatʻs not to say that silver isn’t volatile, as we have seen this year. But overall, it tends to balance out swings in the stock market, and for the average investor, a trusted, well-established ETF like SLV is a great way to invest in the commodity.