By Chris Dieterich
A scorching rally for precious metals paused on Thursday.
Silver and gold prices both fell, with the SPDR Gold Trust ( GLD) down 0.3% and the iShares Silver Trust ( SLV) off 1.7%. Silver had been on a six-session hot streak and gold was up for three days in a row. Precious metals have been hotly in demand all year, helped at first by the China-related early-year stocks swoon, then concerns that central bankers are running about of bullets and, most recently, last month’s Brexit vote.
Paul Gait, analyst at Bernstein, notes that single-stocks are a relatively tricky way to play the silver rally:
“In the wake of Britain’s decision to vote for “Brexit” on 23rd June, we have seen in the market a flight to safe haven assets. Of course this has meant sovereign debt and gold, but it has also meant silver. In fact, whilst gold is up 8% since the vote, silver is up 17%.
This [strong rally] has prompted questions from investors regarding the best way to play the silver rally if you believe that we will see continued silver price strength as a safe haven asset as the Brexit process plays out.
Often produced as a by-product of other metal production, there are relatively few ways to gain exposure to silver via equities, though large silver producers such as Fresnillo ( FRES) and Hochschild Mining ( HCHDF) have taken off since the Brexit vote on the back of the silver rally: up 64% and 40% respectively. However, in our coverage, the only stock with any significant exposure to silver is South32 ( AUS: S32).”
Alternatives include index-tracking exchange-traded funds that own silver stocks. The iShares SLVP MSCI Global Silver Miners ETF ( SLVP), which has screamed higher this year by $157 million. The $55 million Sprott Junior Gold Miners ETF ( SGDJ) has more than doubled in price this year and the $59 million PureFunds ISE Junior Silver ETF ( SILJ) has more than tripled.
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