Investors in silver exchange traded funds have viewed the recent price weakness and consolidation as a chance to buy the metal as holdings in silver-backed ETFs climb back toward record levels.

Silver held in exchange traded products has risen for three months and is now valued at $16.2 billion, Bloomberg News reports.

“Investors bought 797 tons through silver-backed ETPs this year and now hold 18,093 tons, equal to more than eight months of global mine output,” according to the report. “They sold a net 812 tons from ETPs last year. Total assets are now 2.9% below the record 18,639 tons reached in April 2011.”

The $8.8 billion iShares Silver Trust (NYSEArca: SLV) is the largest ETF with about 9,742 metric tons of silver.

The silver ETF is down 4.1% for the trailing three months, and flat for 2012, according to investment researcher Morningstar.

From a technical perspective, J.C. Parets at All Star Charts says silver being able to hold a key support level in recent months is constructive, even though investors seem to have lost interest in silver. He also cited positive momentum divergences and flattening long-term moving averages as positive factors for silver.

iShares Silver Trust

Chart source: All Star Charts

Full disclosure: Tom Lydon’s clients own SLV.

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