Three Ways to Bet on Silver

06/17/2016 9:00 am EST

Focus: COMMODITIES

Doug Fabian

Editor, Successful ETF Investing, ETF Trader's Edge, Weekly ETF Report, and ETFU.com

Many of the same drivers fueling gold’s shine — global uncertainty, a weak US dollar, global debt and the threat of further “negative interest rates” by central banks around the world —also are fueling the shine in silver, asserts Doug Fabian, Successful ETF Investing.

The iShares Silver Trust ETF (SLV) has gained 18% year-to-date; that’s a fantastic gain, but it’s one that we suspect is by no means over yet.

In fact, continued global uncertainty due to the US presidential election, Fed policy, global growth metrics, China’s slowdown, etc. likely will keep money flowing into gold and silver.

To take advantage of this trend, you need to be prepared, I want to provide you with all of the “need to know” on several ways to profit from the boom in silver.

The first, and most common, way is to own SLV. This fund’s purpose is, generally speaking, to reflect the current spot price of silver, and to give investors exposure to the day-to-day movement of the price of silver bullion.

Rather than forcing shareholders to physically own the precious metal, SLV aims to give its investors easier, more cost-effective access to physical silver.

Another great way to gain exposure to the silver market is via ETFs that hold silver mining company stocks. The biggest and most widely held of these funds is the Global X Silver Miners ETF (SIL).

Due to the hefty fixed costs in silver mining, mining companies rapidly can enhance their profitability when the price of the precious metal rises. Also, significant barriers to entry in the silver mining industry give existing silver mining companies a first-to-market advantage.

SIL gives investors access to a broad range of silver mining companies that have benefitted from the surge in silver prices.

The fund itself is comprised of selected companies around the world that are engaged in some aspect of the silver mining industry, such as silver mining, refining or exploration.

The PureFunds ISE Junior Silver ETF (SILJ) focuses on small-cap silver mining and exploration companies. These potentially overlooked companies may have greater potential to pull in big gains in the event of a continued flight to safety in precious metals.

Whether used for investment, jewelry, industrial purposes or an alternative currency, the demand for silver is growing and the mining companies held in this fund stand to benefit.

That benefit certainly has been seen in the recent stupendous performance of SILJ, which has soared 159% year to date through June 7.

It is this kind of fast-paced move that we plan on taking advantage of in the weeks and months to come. So, now is the time to make sure you know all about these three silver ETFs.

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By Doug Fabian, Editor of Successful ETF Investing

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