I – Global information and fundamental analysis about silver

Source : BullionVault

An exchange traded fund (ETF) is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index. In this report, we’ll focus on the silver’s metal.

Silver remains one of the best performing asset classes in the last quarter of 2020 despite recent fluctuations and even if it has been affected by the economic and financial market conditions like most asset classes.

Chart 2 : Silver performance

Source : Admiral

Silver shows a +30% upward variation over 5 years (5 September 2016 – 5 September 2021). The silver price experienced a slow downward trend between the beginning of September 2016 and November 2018.

A particularly volatile period followed, notably during February and March 2020 with a drop of 25%. Then, we see the return of growth, in a marked way, of + 124% between mid-March 2020 and the beginning of August 2020, with the silver price rising from $12.6/oz to $28.27/oz, and this in less than 6 months.

Silver tends to be a reserve value. Indeed, its strong correlation with gold will give it a similar behaviour in terms of volatility. When an economic situation arises, silver tends to see its volumes increase, as in April. More recently, silver has experienced high volumes as a result of the forum’s desire to « pump-up » the price of the metal at the beginning of February.

As mentioned in the paragraph above, silver has reserved itself as a protective value against the COVID19 financial crisis. Volumes increased in early March, resulting in a positive performance of almost 80% in one year.

Chart 3 : Return of silver in 2020 among other assets classes

Source : visualcapitalist.com 

II – ETF Analysis : iShares ETF Silver Trust

For this analysis, I choosed the ETF Silver Trust from Black Rock, which is a physical silver ETF. The iShares® Silver Trust (the ‘Trust’) seeks to reflect generally the performance of the price of silver. That’s the three reasons for investing in silver ETF :

  1. Exposure to the day-to-day movement of the price of silver bullion
  2. Convenient, cost-effective access to physical silver
  3. Use to diversify your portfolio and help protect against inflation

Chart 4 : Performance :

Source : BlackRock

Chart 5 : Characteristics

Source : BlackRock

In conclusion, silver can be a good investment for the coming year. In fact, for the past 100 years, silver has taken advantage of the decline in the value of the dollar to start or continue a rise in its price. It is assumed that the US Federal Reserve will continue to print dollars for the coming year. Thus, the more we print, the more the dollar devalues, which would perhaps allow the metal to pass the $30 mark in order to begin a new upward trend. In addition, this metal reacts to economic downturns and the coming months and years are likely to be difficult for the economy all over the world. It can therefore be a relevant investment from a hedging or investment perspective.


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