Commodities-focused investors hoping to ride the trends of AI growth and electric vehicles may consider devoting a sliver of attention to silver investments, according to one longtime investment strategist.
Mish Schneider, chief market strategist at MarketGauge, points out recent momentum in silver and sees more upside from current levels. The potentially overlooked industrial metal is a valuable electrical conductor, finding use in modern chip design alongside other metals like gold.
Silver is also a critical part of the design of modern EV batteries. While it's not a replacement for certain metals like copper and cobalt, it remains critical to EV battery production by efficiently transmitting energy.
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Silver Investments Show Positive Signs
The metal's fortune is rising alongside that of AI and data centers, with silver generally trending higher since May of last year and outperforming the S&P 500 over that time.
The iShares Silver Trust, an ETF closely correlated to silver prices, recently broke out of a two-month consolidation in early June and is extending its gains.
"It's not an investment, it's a trade," Schneider told the "Investing with IBD" podcast. She says the action in silver can reflect a "buy when it looks terrible, sell when it looks great" mentality among investors.
When Silver Investments Make Sense
Like many commodities, silver can at times see anemic growth compared with top-performing stocks and even other commodities like gold. The SPDR Gold Shares ETF continues to outperform silver year over year.
What's key to investing in silver is watching the wider environment, Schneider says. "If the yields come down and the dollar stays soft and silver continues to outperform gold, we've got upside in silver," she said.
While Schenider cautions that silver is not worth holding through a major downturn, she sees more upside than downside to silver at current levels.
"Is it too late to buy silver? I say no," she said.
From an IBD perspective, investors looking to get exposure to the SLV ETF at current levels could use a close below the 21-day moving average as a well-defined exit.
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