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Commodity ETFs


Last week an amazing thing happened Gold closed past its all time inflation adjusted high of $1843 . Currently Gold is selling for $1890 an ounce, and looks to be quickly closing in on the pyschological round number of $2000 as worries over the economies in the US and Europe continue to mount.

Yet silver dubbed 'the poor mans gold" has barely moved on pace with gold during this recent crisis period. Silver (currently trading at $43.50) is still selling well below its recent high of $49.84 set in April of this year and its the all time high of $50.35 set in Janurary of 1980. Even more astounding is that Silver is selling at more than half of its all time inflation adjusted high of $124 dollars an ounce.

Furthermore the current Gold to Silver ratio at 43.5 to 1, a closely watched indicator to see which metal is undervalued to the other (Gold vs Silver), is well above its 200 year average ratio of 37 to 1, meaning Silver is currently undervalued to Gold.

Silver by far the more volatile metal than Gold is usally the metal that moves the Gold to Silver Ratio back to its historical average, therefore for Silver to equal  its historical ratio of 37 ounces of gold, it would have to increase by 17% to $51 dollars an ounce, just past its all time high, but well short of its inflation adjusted high of $124 dollars an ounce.

Combine these factors with Silver's history of making extreme price moves ,and the metals tendency to rally during market crises makes Silver an extremely attractive metal to purchase at todays prices.

The easiest way to buy Silver is through the following Exchange Traded Funds or ETF's;

  •  Ishares SilverTrust (SLV - ETF report), this is the most liquid and cheapest Silver ETF, with an average daily volume of almost 50 million and an expense ratio of .50%
  • ProShares Ultra Silver (AGQ - ETF report), is a leveraged silver ETF which produces 2X or 200% of the return of spot Silver. It is also fairly liquid with an average volume of 1.3 million, but is more expensive to trade with an expense ratio of 0.95%.

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