ETFs, or exchange traded funds, are mutual funds that are based on commodities. They allow investors to trade something that they could always not access. This has made ETFs gain popularity in the market, but there is also a down side to this type of investment. There are times when the price of a commodity will go up and the price of the ETF based on that commodity declines. In order to make a smart purchase, investors should track the ETF’s value against the market value of commodity.
There are several ETFs traded within the United States from which investors can choose. These are the iShares Silver Trust, ProShares Ultra Silver, ETFS Physical Silver Shares, PowerShares DB Silver, ProShares UltraShort Silver, and UBS E-TRACS CMCI Silver TR ETN. Each represents a different level of market capitalization and yields vastly different rates of return.
The iShares Silver Trust is offered at $17.95 per share and most recently had a 32.81 percent one year return. This fund tracks the spot price of silver bullion and has a market capitalization of $5 billion. This stock has seen a 52 week low of $12.97 and high of $19.44. The ProShares Ultra Silver ETF stock has a $100 million market capitalization and trades at a price of $60.26 per share. This 2x leveraged fund recently yielded a one year rate of return of 45.74 percent.
At the other end of the spectrum, there is the UBS E-TRACS CMCI Silver TR ETN, which sells for $25.86 per share. This $4 million market capitalization company measures the collateralized returns from a basket of silver futures contracts. These contracts are diversified across five constant maturity timeframes from three months up to three years.
Investors should investigate the performance of each of these silver ETFs. Though past performance is not an accurate predictor of future success, it will provide the investor with a general idea of the trends. The current prices of silver are definitely not representative of the usual cost of this commodity. Both silver and gold have been steadily rising in value over the past two years. This has led investors to buy gold coins, silver coins, and make other investments in these precious metals.
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