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Amid rising U.S.-China tensions and worsening COVID-19 crisis, precious metals have become attractive and more appealing to investors. Gold has skyrocketed to an all-time high nearing $2,000 per ounce while silver has jumped to the highest level of nearly $25 in seven years.
The weakness in the U.S. dollar against major global currencies also raised the metal’s attractiveness, as it does not pay interest like fixed-income assets. The Bloomberg Dollar Spot Index is poised for its worst July in decades, having lost 3.9% so far this month. The index is trading at the lowest since 2018. Additionally, massive liquidity injections by central banks across the globe and hopes of further stimulus supported the price of metals.
Investors should note that silver has outshined gold as increase in investment demand, pick-up in industrial demand with a rebound in global manufacturing, and reports of disruptions in mine activities led the way for the white metal. Silver is used in a wide range of industrial applications, and for manufacturing of solar panels and electronics. As such, global push on green energy, growing demand in areas like 5G, and new sources of demand for sensors used in IoT and OLED lighting will continue to boost silver demand (read: Why Silver ETFs are Outshining Gold).
The strong run-up in prices of both precious metals is expected to continue given that prolonged political and economic turmoil will boost demand for safe havens.
Coming to palladium and platinum, the automotive industry, mainly catalytic converters for vehicles, is a big driver of demand. Though the auto industry has been witnessing a downturn this year due to the coronavirus outbreak, supply disruption caused due to lockdown measures have provided a boost to palladium and platinum prices. Additionally, growing environmental scrutiny of vehicle emissions in China and Europe has clearly favored palladium demand.
Against such a backdrop, precious metal ETFs have been shining this month. Below we have highlighted four winners from each corner of the commodity world that has been leading the way higher. These ETFs have Zacks ETF Rank #3 (Hold):
Aberdeen Standard Physical Silver Shares ETF (SIVR - Free Report) – Up 34.3%
This fund tracks the performance of the price of silver less the Trust expenses. It has AUM of $719.8 million and trades in moderate volume of around 395,000 shares per day on average. Expense ratio is 0.30% (read: Precious Metal & Mining Top Last Week: Winning ETFs).
iPath Series B Bloomberg Platinum Subindex Total Return ETN – Up 17.6%
This note is designed to provide exposure to the Bloomberg Platinum Subindex Total Return, charging investors 45 bps in annual fees. It has accumulated $4.4 million in its asset base and trades in a paltry volume of 1,000 shares per day.
Aberdeen Standard Physical Palladium Shares ETF (PALL - Free Report) – Up 17.2%
The fund seeks to match the price of palladium. It owns palladium bullion in plate or ingots kept in Zurich or London under the custody of Bank of New York Mellon. The product has amassed $345.7 million in its asset base and trades in lower volume of about 31,000 shares a day. It charges 60 bps in annual fees.
Aberdeen Standard Physical Precious Metals Basket Shares ETF (GLTR - Free Report) – Up 16.9%
This fund seeks to reflect the performance of the price of all the precious metal in a physically backed form. Gold takes the top spot at 58%, followed by 25% in silver, 13% in palladium and the rest in platinum. The product has amassed $655.6 million in its asset base while trading in lower volume of about 58,000 shares per day. It charges 60 bps in annual fees.
This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has AUM of $30.4 billion and trades in solid volume of 21.9 million shares a day on average. The ETF charges 25 bps in annual fees (read: How to Bet on the Gold Frenzy With ETFs & Stocks).
Bottom Line
Precious metals create wealth and have been the most exciting investment area especially during times of economic and political turbulence. This is because these have value recognition nearly everywhere in the world and could easily be converted into liquid cash in any currency.
The buying pressure has been intense for the precious metals lately and global economic uncertainty has been extremely favorable for their performances. Additional buying could be in the cards for the space if the COVID-19 crisis worsens.
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Precious Metal ETFs Shines in July
Amid rising U.S.-China tensions and worsening COVID-19 crisis, precious metals have become attractive and more appealing to investors. Gold has skyrocketed to an all-time high nearing $2,000 per ounce while silver has jumped to the highest level of nearly $25 in seven years.
The weakness in the U.S. dollar against major global currencies also raised the metal’s attractiveness, as it does not pay interest like fixed-income assets. The Bloomberg Dollar Spot Index is poised for its worst July in decades, having lost 3.9% so far this month. The index is trading at the lowest since 2018. Additionally, massive liquidity injections by central banks across the globe and hopes of further stimulus supported the price of metals.
Investors should note that silver has outshined gold as increase in investment demand, pick-up in industrial demand with a rebound in global manufacturing, and reports of disruptions in mine activities led the way for the white metal. Silver is used in a wide range of industrial applications, and for manufacturing of solar panels and electronics. As such, global push on green energy, growing demand in areas like 5G, and new sources of demand for sensors used in IoT and OLED lighting will continue to boost silver demand (read: Why Silver ETFs are Outshining Gold).
The strong run-up in prices of both precious metals is expected to continue given that prolonged political and economic turmoil will boost demand for safe havens.
Coming to palladium and platinum, the automotive industry, mainly catalytic converters for vehicles, is a big driver of demand. Though the auto industry has been witnessing a downturn this year due to the coronavirus outbreak, supply disruption caused due to lockdown measures have provided a boost to palladium and platinum prices. Additionally, growing environmental scrutiny of vehicle emissions in China and Europe has clearly favored palladium demand.
Against such a backdrop, precious metal ETFs have been shining this month. Below we have highlighted four winners from each corner of the commodity world that has been leading the way higher. These ETFs have Zacks ETF Rank #3 (Hold):
Aberdeen Standard Physical Silver Shares ETF (SIVR - Free Report) – Up 34.3%
This fund tracks the performance of the price of silver less the Trust expenses. It has AUM of $719.8 million and trades in moderate volume of around 395,000 shares per day on average. Expense ratio is 0.30% (read: Precious Metal & Mining Top Last Week: Winning ETFs).
iPath Series B Bloomberg Platinum Subindex Total Return ETN – Up 17.6%
This note is designed to provide exposure to the Bloomberg Platinum Subindex Total Return, charging investors 45 bps in annual fees. It has accumulated $4.4 million in its asset base and trades in a paltry volume of 1,000 shares per day.
Aberdeen Standard Physical Palladium Shares ETF (PALL - Free Report) – Up 17.2%
The fund seeks to match the price of palladium. It owns palladium bullion in plate or ingots kept in Zurich or London under the custody of Bank of New York Mellon. The product has amassed $345.7 million in its asset base and trades in lower volume of about 31,000 shares a day. It charges 60 bps in annual fees.
Aberdeen Standard Physical Precious Metals Basket Shares ETF (GLTR - Free Report) – Up 16.9%
This fund seeks to reflect the performance of the price of all the precious metal in a physically backed form. Gold takes the top spot at 58%, followed by 25% in silver, 13% in palladium and the rest in platinum. The product has amassed $655.6 million in its asset base while trading in lower volume of about 58,000 shares per day. It charges 60 bps in annual fees.
iShares Gold Trust (IAU - Free Report) – Up 10%
This ETF offers exposure to the day-to-day movement of the price of gold bullion. It has AUM of $30.4 billion and trades in solid volume of 21.9 million shares a day on average. The ETF charges 25 bps in annual fees (read: How to Bet on the Gold Frenzy With ETFs & Stocks).
Bottom Line
Precious metals create wealth and have been the most exciting investment area especially during times of economic and political turbulence. This is because these have value recognition nearly everywhere in the world and could easily be converted into liquid cash in any currency.
The buying pressure has been intense for the precious metals lately and global economic uncertainty has been extremely favorable for their performances. Additional buying could be in the cards for the space if the COVID-19 crisis worsens.
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 >>