After being the #1 performing ETF Sector in 2010 silver took a breather in January. Most seasoned silver traders expected a rather harsh correction that would last several months however last week every silver ETF closed at all time highs. The silver mining etf – SIL failed to hit new highs but all the track the actual metal closed out the week at new highs.

Here is a chart of SLV going back to the initial break out in silver last August and as a comparison the brown line is the Silver Miners ETF – SIL. You can see that at this point the miners are lagging but should hit new highs shortly if the rally continues.

Silver ETF SLV Hits New All Time Highs

In general there has been under performance on the part of the miners in relation to the price of gold and silver. This is due to the fact that mining costs have been increasing with the rise in energy and machinery costs. Also, most miners are expanding production which adds to cost and suppresses earnings. Since all stocks are driven by bottom line earnings it is possible for the miners to lag for long periods of time. This is the primary reason why stock investors have flocked to the gold and silver commodity etfs to gain exposure to the actual price of the metal. Since a proper portfolio allocation has roughly 5% exposure to metals many are choosing the metal as opposed to the mining stocks.