- The gold trade may be the new tech trade, according to Mohamed El-Erian, and one does not need to look further than the precious metals rally that has ensued since the beginning of 2020.
- SPDR Gold Shares (NYSEARCA:GLD) and iShares Silver Trust (NYSEARCA:SLV) are up 34% and 57% YTD, respectively, compared to the just 4% gain for SPDR S&P 500 ETF.
- With more looking to invest in the metals, what are some of the differences between them?
- The gold market is far more liquid than the silver market and is larger in terms of the value of its annual supply. In fact, the gold market was valued at $24.5T in 2019, more than five times the $4.4T value of the silver market.
- The silver market is more volatile, however, which means larger price swings that traders can try to exploit. It takes only a relatively small amount of money to have a greater impact on its price, more than gold or other asset classes.
- When it comes to diversification, gold has the edge over silver. That's true for retail and institutional investors, as well as central banks. "Silver is more linked to the business cycle," said William Rhind, founder of ETF provider GraniteShares,. "When the economy is doing well, there is more industrial demand for silver and that can influence prices. There is little industrial use of gold."
- Other differences or investing strategies? Comment below.
- Gold ETFs: IAU, PHYS, SGOL, UGLDF, BAR, UGL, AAAU, GLDM, GLDI, DGP
- Silver ETFs: AGQ, PSLV, SIVR, ZSL, SLVO, DSLV, DBS, USV