Silver ETF Hits 19-Month Low but Investors Aren’t Running for the Exits
June 28th 2012 at 2:07pm by John Spence
The largest ETF that invests in silver bullion fell to its lowest level since November 2010 on speculation Thursday the European summit wouldn’t produce more easing measures.
The $8.5 billion iShares Silver Trust (NYSEArca: SLV) was down nearly 3% at last check. The metal ETF holds 9,876 metric tons of silver, according to sponsor BlackRock.
“Gold and silver extended their earlier losses Thursday, as traders bet that a closely watched meeting of European leaders this week wouldn’t result in new liquidity measures that could increase demand for an inflation hedge,” Dow Jones Newswires reported.
European leaders are scheduled to meet Thursday and Friday to discuss potential measures to fight the debt crisis.
Silver ETFs fell last week after the Federal Reserve disappointed bullish traders who were looking for further quantitative easing from the central bank. [Silver ETFs Fall 6% on Week]
“It’s been the central bank liquidity measures that have been one of the major legs of support for the gold market,” said Dave Meger, director of metals trading with Vision Financial Markets, in the Dow Jones report. “As you undermine one of those legs, it gets a bit wobbly.”
However, investors in SLV, the silver ETF, haven’t been selling during the recent pullback, writes Gene Arensberg for Resource Investor.
“More recently, as silver has fallen below $30, instead of SLV holders acting all fearful and rushing the exits, they have been doing a little dip buying instead. For example, in late April with silver then near $30 and threatening to break lower, SLV reported holding 9,552.14 metric tons of silver metal in their London-based custodian’s vaults,” he said.
“Today, as we write, with silver trading either side of $27.00, not far above its $26 implied support, the silver trust reports holding 9,875.75 tons, or more than 323 tons more silver than in April,” Arensberg wrote. “That doesn’t sound like the silver bears have gotten into the thought centers of the funds holding SLV, does it?”
iShares Silver Trust
Full disclosure: Tom Lydon’s clients own SLV.
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