HardAssetsInvestor

Written by Julian Murdoch  |

December 27, 2010

The Why Of White Metals: Silver, Platinum and Palladium In 2010

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Looking to ride the white metals boom? We investigate several ways to invest in silver, platinum and palladium for 2011.

 

Precious metals have had a heck of a year, even the non-gold metals. Especially those, in fact: As of December 23^rd, silver prices had risen 73% for the year and platinum up 17%; palladium, the surprise winner, had increased a shocking 84%.

 

 

Let’s look at the so-called “white metals” one by one, shall we?

Silver

Never have more investment options been available to silver investors. There’s just one small problem: they all look like clones.

 

 

Silver’s only outliers are AGQ, a leveraged fund up 153% year-to-date, and the Sprott Physical Silver Trust (NYSEArca: PSLV). PSLV, which has only been live since November 1^st, started behind the game, but in just two months it’s already increased 26%. (Neither is pictured on the above chart.)

Year-to-date performance for the other four ETFs is so close to physical silver that picking a winner among the funds becomes more of an individual preference.

If you want a fund that holds bullion and not futures, for example, then ETFS Silver Trust ETF (NYSEArca: SIVR) or iShares Silver (NYSEArca: SLV) could be the fund for you. Generally, both track the price of traded silver, although extreme buying or selling pressure can knock them out of whack with silver’s spot price, as happened back in early November:

 

 

Notice in early November that when silver zigged, SLV zagged.

Sometimes, bullion-backed funds can lag a few percentage points off the price of the metals they track on a given day. To avoid being on the wrong side of the swing, check the intraday NAV for the ETF before making a trade, so you’re sure you’re getting a fair price.

If you’d rather invest in silver futures, then you have two options as well: the E-TRACS UBS Bloomberg CMCI Silver ETN and the PowerShares DB Silver Fund (NYSE Arca: DBS). Of the two, USV has the lower expense ratio, at 0.40 percent. But remember that USV is an ETN, whereas DBS is an ETF; ETNs carry with them particular counterparty risks and tax implications that ETFs do not.