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Is This Silver Pullback A Buying Opportunity For ETFs?

Since peaking this week gold and silver have begun to pull back. Precious metals ETFs are slipping Thursday, with gold and the SPDR Gold Shares (GLD) trading moderately lower Thursday, while silver prices and the iShares Silver Trust (SLV) are tumbling. Both metals have had a meteoric rise recently, but investors are wondering if is this pullback a buying opportunity or a top.

 

As has often been the case, markets do one thing on FOMC day only to reverse course in subsequent days. For now, analysts are seeing the selloffs as a potential buying opportunity. But with silver having been catapulted higher, reaching almost $26.50 an ounce, a nearly $9 gain since the start of the month, 47%, there is some worry that the size of the rally that could result in a significant correction.

 

“Silver has made an attempt to settle below the support level at $23.25 but this attempt was not successful so silver stays in the range between the previous support at $24.00 and support at $23.25.In case silver settles below the support at $23.25, it will head towards the next support level at $22.30. On the upside, silver will likely face some resistance at the previous support level at $24.00. If silver manages to get above this level, it will head towards the next resistance level at $24.95. A move above $24.95 will likely provide silver with an opportunity to test the recent highs at $26.20,” according to analysts at FXEmpire.

 

Still, a pullback could represent a buying opportunity, and for ETF investors looking to get in on the silver action can look to funds like the  iShares Silver Trust (SLV)  and the  Aberdeen Standard Physical Silver Shares ETF (SIVR),  two of the largest ETFs backed by holdings of physical silver:

  • SLV seeks to reflect generally the performance of the price of silver. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. It is not actively managed. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of silver.
  • SIVR seeks to replicate, net of expenses, the price of silver bullion. The shares are backed by physically allocated silver bullion held by the custodian. All physical silver held conforms to the London Bullion Market Association’s rules for good delivery.

 

For those looking for leverage, they can look to ETFs like the  VelocityShares 3x Long Silver ETN Linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV)  and the  ProShares Ultra Silver (NYSEArca: AGQ).

 

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