Silver ETFs: More than Poor Man's Gold

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"There's a huge case for silver today."

It was around one year ago that ETF Securities launched the U.S. industry's second physically backed silver ETF: ETFS Physical Silver Shares (NYSEArca:SIVR), and William Rhind, head of U.S. sales and marketing for ETF Securities, says there's a huge case for silver today.

"A lot of people have been talking about silver very positively this year," he says as he ticks off the many benefits:
  • It's cheap compared to gold. Silver runs around $18 an ounce; gold is just under $1,200 an ounce. "There's a massive difference in the price," Rhind says. That leads some people to look at silver purely on a relative value basis, but it isn't the only thing to consider.
  • Silver is a hybrid metal. Because it's rare, it's precious and it's a store of money much like gold. It's also similar to gold in that it's one of the oldest forms of currency. It was first used by the Lydians around 700 BC.
  • Silver also has industrial applications. Unlike gold, Rhind says, silver is used a lot more in industry.
Rhind also points out that in the last five out of nine years (2001-2009), silver has had a greater rate of return than gold. Silver has delivered 17.6% annually on average, higher than gold in that time.

The silver market is also relatively in balance, meaning that there's as much demand as there is supply. At its current price levels, silver looks undervalued, says Rhind.

Silver is the only precious metal that is far below its all-time high of $49.95, last seen in 1980, which today would equate to approximately $130 an ounce.

"In an environment where people think precious metals are going to rise, don't overlook silver, because silver could be the one that rises the fastest."

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