Silver shined in June, returning almost 10% and beating out the returns delivered by the stock and bond markets in Japan, Europe, and the U.S. The momentum could continue as July tends to brings favorable returns for the precious metal.
What’s behind silver’s gain isn’t all that easy to pinpoint. Gold’s monstrous 43% climb over the past year could mean that it has incorporated all the good news, prompting traders to look at other stores of value and safer assets, like silver. Silver could also be benefiting from new applications in solar panels and its essential role in the semiconductor industry as artificial intelligence booms.
Investors convinced by all that can buy the iShares Silver Trust exchange-traded fund, the most liquid silver fund with $17 billion in assets. The ETF physically holds the metal in vaults in London, giving investors direct exposure to spot prices of silver, minus fund expenses.
What could work in investors’ favor this summer is something called seasonality analysis. Looking back over the past decade, July has been the strongest month for the fund, delivering an average gain of 4.5%. That far outpaces the next best month’s performance: December sports an average gain of 2.7% for the past 10 years, according to FactSet.
Investing in most actively traded futures contract is another option. Historical returns paint a similar picture there, with July’s 10-year average gain at 4.1%, the strongest out of all months. Investing in silver bars and coins are other options.
Of course, silver’s gain in July isn’t guaranteed. The iShares ETF has logged a positive return in July six out of 10 times—the other four times it hasn’t, with 2015 posting a big loss of 6.3%.
“It’s no sure thing,” Jay Kaeppel, a senior research analyst at SentimenTrader wrote in a note Tuesday. But the reality is silver has tended to go up more than down in July, and it’s currently on a good run.
“With silver already in a strong uptrend, the combination of favorable price action and a favorable seasonal trend is a scenario that often creates meaningful opportunities,” Kaeppel adds.
The iShares silver fund is up 25% this year, rivaling gold’s 27% gain.
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