Silver ETFs Surge in 2023: ProShares AGQ & Global X SIL Prices Soar Amid Stimulus Hopes

Silver is rapidly regaining momentum as a preferred inflation hedge and investment vehicle in 2023.

After a two-month lull, silver prices surged on Friday, fueled by renewed optimism surrounding a U.S. coronavirus stimulus package. Initially paused until after the November 3 election, President Donald Trump reversed course last week, proposing a $1.8 trillion aid package, narrowing the gap with the Democrats' $2.2 trillion plan. This development weakened the U.S. dollar, igniting a strong rally in silver.

Key Highlights

• Silver prices climbed significantly as stimulus package prospects lowered the U.S. dollar's value.
• ProShares Ultra Silver (AGQ) broke out of an ascending triangle pattern on increased volume, signaling bullish momentum.
• Global X Silver Miners ETF (SIL) also broke above consolidation with a bullish MACD crossover, indicating strong buying interest.

Since the pandemic lows in March, silver has outperformed gold by approximately 80%, gaining traction as a cost-effective inflation hedge. The gold-to-silver ratio currently hovers around 75, well above its 20-year median of 60, suggesting silver's relative undervaluation.

Traders looking to capitalize on silver's upward trend can consider two prominent ETFs detailed below, each presenting unique opportunities based on technical indicators.

ProShares Ultra Silver (AGQ) - 2023 Price Analysis and Trading Strategy

With $246.7 million in assets under management, AGQ offers twice the daily performance of silver bullion priced in London dollars. It features a tight average spread of 0.10% and daily turnover exceeding 2.5 million shares, making it ideal for leveraged silver exposure. Year-to-date through October 12, 2023, AGQ has returned 37.6%, surging nearly 50% over the past three months. The fund charges a 0.95% management fee.

AGQ recently broke above a two-week ascending triangle on strong volume, a bullish breakout signaling further gains. Traders targeting this move should watch for a retest of the 2023 high near $71.60. To manage risk, placing a stop-loss just below the September low at $37.31 is recommended. This setup offers an attractive risk/reward ratio of approximately 1:2, with potential profits of $22.90 per share against an $11.40 risk.

Trading Tip

The risk/reward ratio helps investors evaluate potential gains relative to risks, essential for informed decision-making.

Global X Silver Miners ETF (SIL) - 2023 Performance and Technical Insights

Global X Silver Miners ETF, with a 0.66% management fee, tracks the Solactive Global Silver Miners Total Return Index, composed of leading silver mining companies. Its portfolio includes major players like Wheaton Precious Metals Corp. (WPM) and Polymetal International plc (POYYF), each holding significant allocations. The ETF boasts average daily volume near $30 million and competitive spreads, making it suitable for exposure to the silver mining sector. As of October 12, 2023, SIL manages over $1 billion in assets, offers a 1.11% dividend yield, and has gained 30.71% year-to-date, including a 14.95% increase since mid-July.

SIL's price movement closely mirrors AGQ, reflecting the silver miners' sensitivity to the metal's price. The recent breakout above consolidation on heavy volume signals strong institutional participation. Additionally, the MACD indicator crossed above its signal line last week, generating a bullish buy signal. Investors should consider taking profits near the August swing high at $52.87 and set stop-loss orders below this month's low at $42.45 to protect against downside risk.

Trading Tip

The MACD (Moving Average Convergence Divergence) is a momentum indicator that helps identify trend direction and potential reversals by comparing two moving averages.

Disclosure: The author held no positions in AGQ or SIL at the time of writing.

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