Precious Metal ETFs Under Pressure: Silver ETFs Bleed Twice as Fast as Gold ETFs in Wednesday’s Selloff

Mumbai, July 8: Exchange Traded Funds (ETFs) tracking silver were hit hardest, as SBI Silver ETF (SBISILVER) shed 2.87 per cent to 215.27 rupees, HDFC Silver ETF (HDFCSILVER) dropped 2.99 per cent to 209.75 rupees and SilverBeES (SILVERBEES) declined 2.75 per cent to 210.35 rupees. Silver iETF (SILVERIETF), Silver Case (SILVERCASE) and Silver1 (SILVER1) also fell between 2.7 per cent and 3 per cent. The declines across these silver ETFs echoed steep domestic silver prices correcting against the LBMA daily spot fixing.

Gold ETFs Slide, But Much Less So

Gold ETFs saw smaller declines, with GoldBeES (GOLDBEES) declining 1.43 per cent to 116.89 rupees, Gold iETF (GOLDIETF) down 1.46 per cent and HDFC Gold ETF (HDFCGOLD) slipping 1.39 per cent. Union Gold ETF (UNIONGOLD) and HSBC Gold ETF (HSBCGOLD) had relatively modest losses of less than 1 per cent each. Despite gold’s decline of around one-to-1.5 per cent across major ETFs, precious metal-linked ETFs still fell less than half as much as their silver counterparts did.

Performance of Broader Market ETFs Mixed

Broad market ETFs like NiftyBeES (NIFTYBEES) and Bank BeES (BANKBEES) declined by 1.91 per cent and 2.47 per cent respectively, in between the performance of gold and silver ETFs. Liquid ETFs like LiquidBeES (LIQUIDBEES) and Liquid Case (LIQUIDCASE) hardly budged, as is typical of money market instruments that track very short-term interest rates.

30-Day Vs 1-Year Returns Tell a Different Story

Broadening our view to longer time frames, gold and silver ETFs have actually been on tear over the past year while broader market ETFs have trended lower. Over the past month, gold ETFs are down just under seven per cent on average while silver ETFs are down more than 11 per cent. On a one-year timeframe, however, gold ETFs are trading up anywhere from 47 to 48 per cent and silver ETFs are up more than 108 per cent. Bank BeES is up only 3.05 per cent annually while NiftyBeES is down 3.15 per cent on year despite seeing gains of 4.41 per cent and 1.04 per cent, respectively, in the past month. Today’s sell-off is just a “healthy correction” in what’s been a multi-month bull market for precious metals.

Takeaway

While precious metal ETFs declined harder and faster than broad market ETFs did on Wednesday, the strength in gold and silver prices over the past year has been far stronger than equities. For holders of precious metal ETFs, today’s pullback may be disappointing but hardly fatal. Silver’s nearly doubled the gain in gold ETFs over the past year, but even gold has more than doubled the return of broad equity market ETFs like NiftyBeES. Whether today’s move ushers in a longer reversal remains to be seen.

Source: https://www.nseindia.com/market-data/exchange-traded-funds-etf