Volume in iShares Silver Trust (NYSEArca: SLV) has exploded along with activity in options contracts based on the exchange traded fund (ETF) as silver prices flirt with record highs and the Federal Reserve meets this week.

The silver ETF saw wild swings in heavy trading Monday as bullion prices made a run at $50 an ounce, their highest nominal level since the Hunt Brothers attempted to corner the market in 1980. Options contracts on the silver ETF saw four times the average daily turnover. [Options Traders Zero In on Silver ETF.]

Silver prices could see a big move from here as traders watch to see if the metal can break through $50 an ounce, or if the key level acts as resistance.

The Fed’s announcement on interest rates and the first-ever press conference with Fed Chairman Ben Bernanke could also fuel volatility in silver prices this week.

The silver ETF was down nearly 2% in premarket action Tuesday.

iShares Silver Trust

Full disclosure: Tom Lydon’s clients own 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.