If Silver Crashes, This ETF Will Pop

Silver just made a historic move beyond the $35 mark. In fact, now trading at $36.56, silver could see even more upside with economic uncertainty, growing industrial demand, and tightening supply. We also have to consider that silver is seeing another deficit with a projected shortfall of 149 million ounces this year, according to CNBC. 

“Silver is up 25% from a year ago and has room to run higher, with many analysts predicting $40 per ounce by end of year,” says Brett Elliott, director of content at precious metals marketplace APMEX, as quoted by CBS News. “This is roughly a 20% gain from current levels, which would be an excellent return if price action follows the expected path.”

Key Points in This Article:

• Silver is trading near its five-year highs after gaining nearly 105% since August 2022.
• The precious metal benefits from safe-haven asset inflows similar to gold.
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Silver Has Been Outperforming

Near-term, silver prices could easily appreciate with strong industrial demand, supply issues, a weaker U.S. dollar — which has fallen by nearly 10% over the past six months — and ongoing geopolitical tension. In fact, over the past month, silver has outperformed gold by gaining 9.90% to the yellow metal’s gain of 0.51%.

At the same time, there’s reason to be cautious. Should we see a stronger dollar at some point, slowing industrial demand or a spike in supply, silver could turn lower. From its five-year low of $17.84 in August 2022 to its current price of $36.56, silver has gained 104.93%. 

That being said, investors may want to hedge for potential downside in silver, which they can do by trading an inverse silver exchange-traded fund (ETF).

ProShares UltraShort Silver ETF

With an expense ratio of 0.95%, the ProShares UltraShort Silver ETF (NYSEARCA: ZSL) seeks daily investment results that correspond two times the inverse of the daily performance of the Bloomberg Silver Subindex. If the Subindex were to drop 1% on a trading day, the ZSL would increase by about 2%.

It’s a great way to hedge your bets with silver. But traders should be mindful that inverse leveraged ETFs carry elevated risk and are meant to be used for short-term positions.