Despite significant pain inflicted upon the precious metals complex by the rising U.S. dollar, some investors are not throwing in the towel on silver exchange traded funds. In fact, they are doing just the opposite and putting new money to work with the likes of iShares Silver Trust (NYSEArca: SLV).

Bargain-hunters have been accumulating positions in exchange traded silver products, with holdings now just shy of the record highs seen in October 2013. In contrast, non-commercial short interest in the futures market is near a record high (chart below), boosting futures open interest to the highest level since February 2008. Last week, silver declined for the 11th consecutive week, the longest period in the history of our weekly database since 1968. With short positioning stretched, a sharp short-covering rally for silver is becoming a possibility,” said ETF Securities in a recent research note.

ETF Securities is the issuer of the ETFS Physical Silver Shares (NYSEArca: SIVR), the second-largest U.S.-listed silver ETF behind SLV.

Like gold ETFs, silver funds have been hammered this month as the U.S. dollar has gained steam, prompting some traders to cut bearish bets while boosting short positions against silver. SLV is down almost 9% this month while the PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP) has climbed 3.1%. [Dollar Inflicts Pain Upon Commodity ETFs]

However, the bargain hunting mentioned by ETF Securities was on full display last week as investors added nearly $99 million to SLV while pulling $163.7 million from the SPDR Gold Shares (NYSEArca: GLD). Holdings at global silver ETFs have been steadily rising even as investors pull out of gold funds, according to ETF Securities data. [Investors Sticking With Silver ETFs]