The Phaserl


Silver ETF Returning 280% Says Party Not Over in Yield-Less Era

Rally in silver prices could be sustained, Fresnillo says

by Luzi Ann Javier, MineWeb:

For investors who missed silver’s 46% rally this year, it’s not too late to jump in, according to the firm behind the world’s best-performing exchange-traded fund.

The main reason for investors piling back in to precious metals this year — low interest rates — isn’t going away anytime soon, said Andrew Chanin, chief executive officer of PureFunds, whose junior silver miner ETF has delivered holders a 280% return this year.

Silver is rallying the most among major commodities this year as about $9 trillion of debt tracked by the Bloomberg Global Developed Sovereign Bond Index offer yields below zero, meaning those who buy the debt and hold to maturity stand to lose money.

“That really changes the landscape,” Chanin said in a telephone interview from New York this week. “If you have negative interest rates across sovereign debt, suddenly zero percent may start to look more attractive than negative rates. That’s been causing more people to become interested in investing in precious metals.”

Central banks around the world are cutting rates or engaging in massive asset purchases or both, sending yields on bonds from Japan to the UK to record lows. On August 8, the Bank of England resumed gilt purchases while India’s central bank Governor Raghuram Rajan said its policy stance remains accommodative.

Yields aren’t the only driver. Silver is outperforming the quintessential haven, gold, because production of the white metal is forecast to decline for the first time since 2011 as physical demand is seen rising for a fourth straight year.

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