From a supply perspective, the United States Geological Survey states that silver is nearly twice as rare as gold in the long term because it is not recycled at the same rates as gold. Also, at current consumption rates, all of the silver that is in the earth's crust will diminish away in the next 25 years. This will likely put supply pressures on the price of the metal.
A combination of these factors will likely provide support to silver prices; the following ETFs should reap the benefits:
iShares Silver Trust
(SLV), which physically holds silver bullion and closed at $18.27 on Wednesday.
PowerShares DB Silver Fund
(DBS), which holds futures contracts in silver and closed at $33.16 on Wednesday.
PowerShares Ultra Silver
(AGQ), which seeks to gain twice the performance of silver bullion and closed at $68.06 on Wednesday.
When investing in these equities, it is important to consider factors that could potentially hinder the price of silver, like an unexpected surge in the dollar. A good way to protect against these factors, as well as the inherent risks involved with investing in equities, is through the use and implementation if an exit strategy, which triggers price points at which an upward trend in gold could potentially be coming to an end.
According to the latest data at
, the price points for the aforementioned ETFs: SLV at $17.49; DBS at $32.03; AGQ at $56.38. These price points fluctuate on a daily basis and reflect changes in market conditions. Updated data can be found at www.SmartStops.net.
Written by Kevin Grewal in Laguna Niguel, Calif.