Silver ETFs in Demand as Traders Eye Breakout

Up more than 29% this year, few assets have outperformed silver in 2024.

Thanks to a strong rally in the precious metal, the iShares Silver Trust (SLV) is up 34%. 

The price of silver topped $32/oz for the first time in 11 years earlier this year. In recent days, it’s been hovering around those levels, seducing traders who are hoping for a breakout to new highs. The jump has outpaced even gold, which has climbed 27% year-to-date, as investors nervous about the economy turn to the traditional safe-haven assets. 

SLV, far and away the largest U.S.-listed silver ETFs with just under $15 billion in assets under management, has attracted $1 billion of inflows since the start of the year, with most of that coming in the past three months.

Some investors see value in silver, which hasn’t hit a new all-time high since 2011.

The gold/silver ratio, which measures the relative value of gold versus silver, is around 84—well within the range it’s been in over the past two years, but higher than the 64 reached in 2021.

The ratio falls when silver is outperforming gold and rises when gold is outperforming silver. 

The lowest value for the ratio in modern history was 14, set in 1980. More recently, the ratio was 32 when the price of silver last hit a record high. 

Meanwhile, the highest gold/silver ratio in recent memory was 124, set during the heart of the Covid pandemic in March 2020. 

Unlike gold, which derives most of its demand from investors big and small, silver is primarily an industrial asset. 

Industrial Demand for Silver Rises

Industrial demand made up 55% of total silver demand in 2023, according to the Silver Institute, and is forecast to account for 58% of demand this year.

Jewelry is another big silver demand component, making up 17% of forecast demand for 2024. That’s similar to the demand for physical silver investments, like bars and coins. 

ETF demand has tended to be much choppier, with inflows in some years followed by outflows.