Silver ETFs Fall on Fed, QE3 Outlook
April 4th 2012 at 10:16am by John Spence
Silver exchange traded funds dropped 4% Wednesday in continued selling after the Federal Reserve minutes suggested the central bank likely won’t engage in further quantitative easing unless the economy backslides.
“What we see today is a rather broad-based sell-off in financial markets,” said Carsten Fritsch, an analyst at Commerzbank, in a MarketWatch report. “The trigger was yesterday’s Fed minutes which dashed hopes of (a third round of quantitative easing.)”
The iShares Silver Trust (NYSEArca: SLV), PowerShares DB Silver Fund (NYSEArca: DBS) and ETFS Physical Silver Shares (NYSEArca: SIVR) were down about 4% Wednesday afternoon.
Meanwhile, gold ETF such as SPDR Gold Shares (NYSEArca: GLD) slipped more than 1%.
Gold is weakening toward $1,600 an ounce but some analysts think the long-term trend for the precious metal remains higher.
“I wouldn’t be surprised if we push lower towards $1,600- – that is what we think is a floor and we are unlikely to fall substantially below that,” said Standard Bank analyst Walter de Wet in a Reuters report.
“”We don’t see real interest rates positive this year … We still think globally that monetary supply will continue to grow — maybe not to the same rate as it did but certainly it’s going to grow and these things are positive for gold,” he forecast.
Silver ETFs were up about 17% year to date heading into Wednesday’s trading, while the gold funds have gained 5%.
iShares Silver Trust
Full disclosure: Tom Lydon’s clients own GLD and SLV.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
