Downsides of a Silver ETF

ETFs present you with a very diversified way to invest in commodities, industries and indexes; therefore, it is no surprise that silver ETFs have become popular in recent years. While silver ETFs can present you with some good opportunities, it is best to be aware of the downsides of investing in them. 

Low Correlation

Silver as a commodity has low correlation to many other things. About the only thing that it is directly correlated with is gold. Therefore, it can be hard to predict when to buy and sell your shares of the ETF. You may not have much warning before it is time to make a move.

Goes Against Economy

When inflation is high, silver and gold tend to go up in value. More people are putting their money into commodities instead of in cash. Therefore, if the economy is going well, the value of your portfolio could actually go down. It is inversely related to the strength of the dollar in many cases. 

No Physical Delivery

When you invest in a silver ETF, you are given a certificate that insinuates that you own a portion of silver. If an economic meltdown were to occur, your certificate would be worth nothing. Possessing actual silver will provide you with value regardless of what happens in the market. 

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