Trump tariffs, Russia-Ukraine ceasefire, heated West Asia along with geopolitical instability have recently seen a 'wild card entry' – the US administration's military operation in Venezuela. This has once again cast clouds of uncertainty over the global market. As a result, a section of investors are choosing precious metals like gold and silver as 'safe-havens' compared to shares of various companies. In this regard, Gold and Silver Exchange Traded Funds (ETFs) are among their preferred investment instruments.
Why gold and silver are back in favour
Statistics show that gold and silver have filled investors' pockets over the past year. Investors in both metals have received returns of 67 and 157 percent respectively over one year. According to some experts, as uncertainty increased across the market last year, a section of investors moved a large portion of their assets from various investment instruments to buy gold and silver.
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However, with profit booking beginning in gold and silver at the start of this year, speculation had begun about whether a 'sideways' trend was starting in the precious metals market. But Friday night's Trump administration 'raid' on Venezuela and the capture of that country's President Nicolas Maduro has once again bred uncertainty across the market. As a result, in the volatile market, a section of investors are again choosing gold and silver as safe havens.
Some experts claim that the US administration's import duties on goods from various countries and events like military operations in Venezuela could become key factors in that country's inflation. Additionally, how employment conditions will remain there is also important for the fluctuation of the dollar index against various countries' currencies including the euro. In this case, if the dollar index walks the path of devaluation against various countries' currencies, then the importance of gold and silver will increase as hedging instruments. As a result, they believe buying gold and silver could be profitable for investors.
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Gold vs silver ETFs: What experts are watching
Should one invest in Gold or Silver ETFs? The majority of experts claim that the ratio between gold and silver prices usually remains around 1:70. But recently the ratio of gold and silver prices has come down to around 1:60, which has sent silver into the 'overbought zone'. As a result, they anticipate that gold's sparkle could be stronger than silver in the coming days.
Notably, due to rocket-speed growth in gold and silver prices last year, the trend of investing through Gold and Silver ETFs has increased tremendously. According to experts, before buying ETFs, it is necessary to verify whether their valuations remain appropriate based on market conditions. If any investor invests in ETFs by paying higher premiums relative to the market, the risk of facing losses increases in that case.
