360 One AM has launched its Silver ETF to enableinvestors to not only participate in a potential near term rally in silver, butalso allocate 5% of portfolios to this under-owned precious metal.
Gold-silver ratio (GSR) – a widely tracked metric by precious metal analysts is suggesting near term upside potential for silver. The ratio, which tracks price per ounce of gold vs price per ounce of silver is now at a high of over 90 – which is higher than its recent years average of 71-74 and a lot higher than its historical average of around 60. Gold has run ahead of silver and GSR suggests its time for silver to play catch up.
Sliver is unique in the sense it is both a monetary metal as well as an industrial metal. When gold prices move up sharply, silver comes into prominence as a relatively cheaper precious metal. On the other hand, its industrial use continues to grow on the back of soaring demand from solar panel manufacturers and other electronics manufacturers.
Silver is now in deficit situation in terms of demand vs mining supply, signifying potential for price increases ahead.
Rahul says beyond the near term GSR driven mean reversion trade, there is a strong case for silver as a core 5% allocation in all portfolios as demand from both segments – monetary metal and industrial uses –is growing at a healthy clip amidst tight supply.
With ETFs now getting par treatment on capital gains tax, silver ETFs are a convenient as well as tax efficient way of owning a promising metal in your portfolio.