Silver Soars In 2009

All eyes have been on gold in the recent weeks as the yellow metal has jumped to 7-month highs, closing over $1000 an ounce. If you turned on the tv or read the newspaper, you couldn’t help but hear or see something about gold.

Yet, quietly, silver, long considered to be gold’s “poorer cousin”, has also been jumping and, in 2009, has well outperformed gold.

Silver is both a precious metal and an industrial metal. In 2008, silver was hit hard as the industrial demand dried up. Silver lost 10% in 2008 which still beat equity returns but under performed compared to gold.

In 2009, however, the story has reversed. Through Feb 24, silver has soared 24% in 2009 compared to gold’s solid 9.6% return. Comparatively, the S&P 500 was down 14% during the same time period.

Even with the big gain, silver is still trading well below its 2008 high of $20.79, which is also a multi-decade high.

Demand has been rising for silver. The iShares Silver Trust (SLV), the largest silver-backed ETF, reported a new record high in bullion holdings on Monday after holdings rose 2% to 8,180.46 tonnes of bullion compared to 8,027.11 tonnes on the close on Friday, Feb 20.

Investors can buy silver ETFs, which actually own the metal, through the iShares Silver Trust or the Ultra Silver Proshares (AGQ), which is the double long silver ETF.

If you’re a contrarian, there is also the ProShares UltraShort Silver ETF (ZSL).

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