Silver trading has made headlines recently as Reddit-fueled retail investors spilled over from the recent short squeeze into the commodities market last week.
Silver exchange-traded funds like iShares Silver Trust (NYSE: SLV) and Global X Silver Miners ETF (NYSE: SIL) saw massive inflows early in the week, with shares gaining 7.1% and 12.1%, respectively, on Feb. 1 as users on the Reddit forum r/WallStreetBets following the momentum of the GameStop (NYSE: GME) rally sought to push the metal to all-time highs. While the commodity reached a seven-year high above $30, the silver pump did not have the same movement behind it, causing the metal to quickly fall back from speculative heights.
Analysts at Goldman Sachs, in a recent research report, projected that silver prices could rise as high as $33 an ounce by the end of the year, but that was not going to happen due to a retail investor frenzy. The firm's commodities chief Jeffrey Currie told Bloomberg News that the silver market is valued at about $200 billion annually, which makes the commodity much to large for investors to manipulate the way they did stocks like GameStop.
Despite the volatility the metal is facing, long-term outlooks towards silver are turning bullish due to President Joe Biden's aggressive climate change policies that being pushed alongside coronavirus relief efforts.
Silver is a key component in the manufacturing of solar panels, which Currie says makes silver a better investment over Gold (NYSE: GLD) for investors looking to get into the metals market. Silver is used in solar cells as the metal is a cost effective conductor of heat and electricity.
"I like to say that it's a turbo-charged version of gold," Currie told CNBC's "Fast Money: Halftime Report" on Thursday, pointing out that silver could benefit long-term from more climate change efforts from governments and corporations.
For investors looking to break into the silver market, silver ETFs are a good choice to maximize gains and minimize losses. These funds closely track the price of silver and are generally more liquid than owning the physical metal itself. Like other precious metals, silver can also be held as a hedge against inflation, which can offer another benefit as government spending is expected to increase to combat the coronavirus.
There are several options for trading silver ETFs other than the popular choice of iShares Silver Trust. Invesco offers a strictly silver fund called Invesco DB Silver Fund (NYSE: DBS), which has an expense ratio of 0.75%. Aberdeen offers two options, with a silver-focused Aberdeen Standard Physical Silver Shares ETF (NYSE: SIVR) and a more broader metals market fund Aberdeen Standard Physical Precious Metals Basket Shares (NYSE: GLTR), with respective expense ratios of 0.30% and 0.60%.
Silver ETFs have significantly outperformed the broader market over the past year.