We say it over and over again here at Cabot Investing Advice: we’re stock pickers. Everything else is secondary, and that includes ETFs—but there are times when investing in exchange-traded funds makes sense. And if you invested in one silver ETF in particular this year, you picked the right time.
PureFunds ISE Junior Silver ETF (SILJ) is its name. It’s a silver ETF comprised of 24 publicly traded junior (i.e. small-cap) silver miners. Rather than tell you how well SILJ has performed this year, I’ll let the chart do all the talking.
Not bad, eh? Year to date, SILJ is up 270%, or more than twice the gains in the VanEck Vectors Gold Miners ETF (GDX). There are two factors at play. One, for all the attention that gold (and gold stocks) has gotten this year, silver has been the faster-rising precious metal, with prices up 49% in 2016 compared to 29% for gold. And two, when the price of a commodity rises, shares of the smallest miners tend to rise even faster.
Now, even the biggest gold and silver bug probably couldn’t have foreseen a silver ETF like SILJ nearly quadrupling in the first seven months of the year. But two months ago, one of the contributors to our Wall Street’s Best advisory recommended SILJ as a momentum play when it was trading at 11. Today it’s knocking on the door of 19 and hovering near three-year highs. Having just broken through 17 resistance and with a 50-day moving average that’s been on the uptick since February, SILJ’s epic 2016 run could be far from over.
More important than the booming success of SILJ itself, however, is what it says about ETF investing. When chosen selectively and at the right times, ETFs can be an efficient and profitable place to invest your money. Sector ETFs can be particularly profitable because they allow you to invest precisely in the economic sectors you think are most likely to bring the biggest gains.
So, when a sector (or commodity) such as silver is thriving the way it has this year, that’s the time to buy a silver ETF such as SILJ. The more specific the sector ETF, the better—which is why a fund comprised specifically of junior silver miners is so enticing. It’s the type of sector ETF that can nearly quadruple your money in little more than half a year!
Stock picking can be hard, especially when it comes to a sector as relatively obscure as silver miners. Besides, in the case of silver (or gold), it’s really the sector that you feel more strongly about than any specific stock.
By investing in SILJ (now, and certainly six months ago) you gain access to a range of stocks, and don’t have to risk picking the one or two laggards in the bunch.
To see more profitable stock and ETF picks like SILJ recommended by our stable of Wall Street’s Best analysts, simply click here.
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