October 24
Silver ETF Perfect Way to Hedge Your Risk in Today’s Financial Crisis
Silver is termed as a precious metal and over the time apart from being used as jewelry, people have started using and accepting silver in different verity of items. Silver is also being used these days as raw material for making refrigerators, keyboards, phones and silverware. So the importance of precious metal commodity like silver has increased as a hedge against the downward market, and looking at today’s financial crisis and market volatility it becomes even more important for traders to use precious metal ETFs. Further, not only for the hedgers but also for investors looking for returns there has been a steady surge in the price of silver over the years. Reason could be any for a trader to invest but Silver ETF is becoming a effective way of investing in precious metal and not dealing with the hassle of physically holding silver.
Generally there are two types of Exchange Traded Funds that deal in silver where a trader can invest. First type of ETF is where banks or financial institutions actually hold silver and Second type of ETF is where fund managers invest in the futures and options that track the price of silver. Both the types of ETF will move in the same direction as the current cash price of silver. Silver ETFs become a perfect investment for banks or institutional investors looking for short term gain or who wants to use this commodity fund to hedge their risks from other investments for a while. However, there are a limited number of investors who are looking for long term gains out of this precious metal based on its robust historical data and also because they want to play safe.
Some of the most popular Silver ETFs are as follows:
1.) iShares Silver Trust (SLV): This fund is quite old in comparison to others that offer Exchange Traded Funds in Silver, it is also one of the largest of all. SLV is a fund that holds physical silver and keeps the investors free of the headaches associated with holding precious metals. Today iShare Silver Trust holds silver worth $4.54 billion.
PowerShares DB Silver Fund (DBS): Unlike its counterparts this fund doesn’t hold physical silver but it invests in derivatives that track spot price of silver. Futures and options contracts these fund deal in are based on an index managed and developed by Deutsche Bank.
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