Back to top

Image: Bigstock

Precious Metal & Mining Top Last Week: Winning ETFs

Read MoreHide Full Article

Precious metals ranging from silver, gold, platinum and palladium, all staged a rally last week. The week was downbeat for Wall Street thanks to rising virus cases and reversing of economic reopening by some key U.S. states.

The U.S. stimulus package CARES Act worth $2.2-trillion is about to expire by July end and policymakers commenced discussion on further package. The S&P 500, the Dow Jones and the Nasdaq Composite lost about 0.28%, 0.76% and 1.33% last week.

Some tech stocks started losing their appeal probably due to overvaluation concerns. The ongoing earnings season has been mixed. Against this backdrop, below we highlight a few winning ETF areas of past week. And it is interesting to note that most of the winners came from the precious metals’ area. Let’s take a look.

Silver Metal & Mining

Silver has been on a stellar ride with prices climbing to the highest level in nearly four years. Increase in investment demand, pick-up in industrial activity due to factory reopening after lockdowns, and investors’ appetite for alternatives to the safe-haven asset gold (which is pretty pricey at the current level) led to the rally.

Unlike gold, silver has considerable presence in the industrial sector. About 50% of the metal’s total demand comes from industrial applications. So, the reopening of global economies is helping silver more than the yellow metal (read: Here's Why Silver Outshining Gold ETFs).

Growth in the global solar PV industry, a likely rebound in global computer shipments and new sources of demand for sensors used in IoT are providing a boost to silver demand. A raft of global stimulus, including the latest EU deal of borrowing 750 billion euros, aided the rally.

iShares Silver Trust (SLV - Free Report) (up 17.8%),Aberdeen Standard Physical Silver Shares ETF (SIVR - Free Report) (up 17.6%) and E-TRACS UBS Bloomberg CMCI Silver ETN (USV) (up 16.7%) are among the key gainers in this field.

Palladium

Next comes palladium with Aberdeen Standard Physical Palladium Shares ETF (PALL - Free Report) adding about 10.5% in the week.  The automotive industry, mainly involved in the manufacturing of catalytic converters for vehicles, is a key driver for palladium. Growing environmental scrutiny of vehicle emissions in China and Europe has clearly favored palladium demand. Against this backdrop, the latest EU stimulus deal which pays attention to environment control, has probably given palladium a boost.

Platinum

Aberdeen Standard Physical Platinum Shares ETF (PPLT - Free Report) andGraniteShares Platinum Trust (PLTM) added 10.1 and 9.6%, respectively, in the past week. Platinum and palladium are both used in engine exhausts to lower emissions. Although the coronavirus outbreak dimmed the outlook of the car industry, analysts still expect prices for both metals to rise gradually through 2021.

Gold Miners

Gold miners were also winners. Global X Gold Explorers ETF (GOEX - Free Report) (up 8.2%), Sprott Junior Gold Miners ETF (SGDJ - Free Report) (up 8.1%) and VanEck Vectors Junior Gold Miners ETF (GDXJ) (up 7.9%) topped the list in this area. A great level of uncertainty leading to safe-haven demand, rising virus cases, a super-dovish Fed and still-cheaper oil prices (which is used as an input by gold miners) triggered the rally.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>