The recent spike in Treasury yields is hampering precious metals prices, but investors shouldn’t dismiss silver and the Sprott Physical Silver Trust (PSLV ).
PSLV is a closed-end fund that lets investors redeem large blocks of shares in exchange for delivery of silver bullion.
Sprott Physical Silver Trust often trades at a premium to net asset value (NAV). Closed-end funds can see large premiums and discounts, while exchange traded funds (ETFs) have an arbitrage feature that tends to keep prices much more in line. PSLV does possess some unique benefits however.
The fund is worth serious consideration today because many commodities market observers believe silver is poised to rebound.
“Signs of inflation are already here, and the best trade in the short-term is silver, said ex-JP Morgan managing director and now CEO of Trovio, Jon Deane,” reports Anna Golubova for Kitco News. “After receiving a wave of retail attention earlier this year and briefly trading above $30 an ounce, silver’s mainstream media coverage is fading. But keen investors are still buying up the physical metal, which is a sign that the physical silver squeeze is far from over, according to Deane.”
Other Catalysts for 'PSLV'
PSLV “offers a potential tax advantage for certain non-corporate U.S. investors. Gains realized on the sale of the Trust’s units can be taxed at a capital gains rate of 15%/20% versus the 28% collectibles rate applied to most precious metals ETFs, coins and bars,” notes Sprott.
Amid increased adoption of renewable energy sources, new, fast-growing end markets are emerging for silver. Translation: the expected influx of cash to the renewable energy industry thanks to Biden’s victory is seen as benefiting silver prices. Analysts are growing bullish on the white metal.
“Short-term, silver is your best trade. There is a lack of silver around the world. There is not much silver at any refineries and getting your hands on physical silver is still difficult. There is a risk of a real silver squeeze this year," Deane told Kitco News.
He believes it’s possible silver notches a big rally.
“This year, silver is also a good leverage play on gold considering the supply issues as well as the climate change angle, which is why the precious metal is likely to outperform gold this year. Deane does not rule out silver hitting $60 sometime this year,” concludes Kitco News.
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