Miner, Silver ETFs Gain Momentum
Source: ETF Trends, John Spence (7/18/11)
"Investors' desire for safe havens amid the debt upheaval has led them to precious metals, and silver and miners are leading the way."
Investors' desire for safe havens amid the global debt upheaval has led them to precious metals, and within the category exchange traded funds tracking silver and miner stocks are leading the way.
The largest ETF for silver, iShares Silver Trust, was up more than 3% on Monday with concerns over Europe's sovereign crisis and the U.S. debt ceiling fueling interest in "poor man's gold."
Investors have also discovered an appetite recently for ETFs that invest in miner stocks, which can behave differently from bullion prices. Global X Silver Miners added over 2% on Monday while Market Vectors Gold Miners rose 1.5% at last check.
While an increase in the U.S. debt limit is "extremely likely to occur, the highly politicized battle in achieving it is adding to economic and financial uncertainty that can take some of the blame for a growth-stifling lack of business and consumer confidence," said David Kelly, chief market strategist at JP Morgan Funds. "Similarly, in Europe, an emergency meeting of Eurozone leaders is set for Thursday as concerns about debt in Greece, Portugal, Ireland and Spain have now spread to Italy."
Debt fears are pushing gold and silver prices higher, as well as companies that mine the metals.
For example, Market Vectors Gold Miners "exhibits significantly greater leverage to gold prices than direct physical ownership," says Morningstar's Abraham Bailin in a profile of the ETF. If the underlying drivers of physical gold remain strong as mining operations expand, the ETF "should benefit in spades."
Options traders were placing bullish bets on the gold miner ETF last week, The Wall Street Journal reported.