The amount of bullion in silver exchange traded funds has declined from the record high set in April, but ETFs still control nearly 18,000 metric tons of silver, according to a report.
Total holdings at the end of October stood at 577 million ounces, or 17,947 metric tons, down from 621 million ounces, or 19,315 tons, the record peak established in April this year, according to a Silver Institute report prepared by Thomson Reuters GFMS.
ETFs allow investors to buy shares backed by silver with one trade. Some funds hold physical silver, while others invest in futures contracts.
The first silver ETF was launched in 2006 and the financial products have led to “the increasing participation of retail and high-net-worth investors, whose only access to the physical market before the introduction of ETFs was essentially in the coin and bar market,” the Silver Institute noted.
The largest silver ETF by assets is the $10.6 billion iShares Silver Trust (NYSEArca: SLV), which holds about 314.6 million ounces. ETFS Physical Silver Shares (NYSEArca: SIVR) is another U.S.-listed ETF.
“Looking at recent trends in more detail, early 2009 saw significant growth in global silver ETF holdings. This was mainly driven by rising concerns over the global financial stability, which encouraged demand for safe haven assets,” according to the report. “In 2010, the market saw a further rise in silver ETF demand. The increase was largely driven by economic and financial problems in Europe and the U.S., quantitative easing in major advanced economies as well as rising inflationary concerns.”