Silver ETC Plunges as Bubble Bites Back
An investor recently asked Fidelity about their disappointing experience with the iShares Physical Silver ETC (ETC) after it plummeted in value compared to gold. The ETC tracks the price of silver bullion and did a good job of mirroring its performance, but its decline was more than twice as severe as gold's, at 45% versus 19.5%. This volatility is attributed to a classic speculative bubble that burst when prices fell.
The bubble phase has now passed, with the silver price fluctuating around $59 an ounce for the past six weeks and recently rising above $60. While it's impossible to predict what happens next, there are ongoing fears of inflation and 'monetary debasement' by Western countries, which may support precious metals.
Many financial advisers recommend holding precious metals as part of a diversified portfolio, citing their potential safe-haven properties in times of turmoil or high inflation. The Ruffer Investment Company and Personal Assets Trust have allocations to gold bullion and 'gold and precious metals exposure', respectively.