Tuesday, March 21, 2006

 

SEC Approves Silver ETF: Updated

Reuters has this to report. "U.S. benchmark silver futures on Tuesday reversed losses to trade at session highs after the U.S. Securities and Exchange Commission said it approved rule changes for a silver exchange-traded fund."

"Silver for May delivery at the COMEX division of the New York Mercantile Exchange bounced to $10.41 an ounce, up 4.8 cents, at 11:41 a.m. EST. The SEC said it has approved rule changes that will allow the American Stock Exchange to list shares in Barclays Plc's iShares Silver Trust, which is designed to track the price of the metal."

Update: Silver hit it's highest level in more than 22 years on Tuesday on investor buying, after a ruling by U.S. regulators seemed to lead the first silver exchange-traded security one step closer to final approval. 'It shouldn't take long for the registration statement to get approved, so I think the market will move somewhat higher over the next couple of days because people will be focusing on what this may mean for the price of silver,' said Jeffrey Christian. The silver ETF would be backed by silver bullion held in vaults in London, with each share worth about 10 ounces of silver."

"Spot silver climbed as high as $10.55 an ounce and was last indicated in New York at $10.53/10.56, against Monday's late quote of $10.33/36, a rise of 1.65 percent on the day."

"'Silver has hit our one-month target of $10.50/oz but we believe that it can trade towards our three-month target of $11/oz very quickly. Longer term forecasts will now be highly dependent on the investor interest in the ETF,' John Reade, analyst with investment bank UBS, said. Silver could rally further if the ETF eventually prompts both substantial spot purchases and also speculative buying on fears about potentially decreasing liquidity in the global market."

"An announcement by Germany's Bundesbank that it would sell no substantial amount of gold from its reserves over the next six months had no immediate impact on gold prices but would support market sentiment, they said. 'The market has largely ignored news that the Bundesbank is not going to sell gold this year. It just shows that the funds are not very keen on gold at present,' said Yingxi Yu, analyst at Barclays Capital."

"Spot gold had made several attempts in the past two weeks to break above $560 an ounce, but prices fell as investors booked profits. It slid to $546.90 before recovering to $551.80/552.70 late in New York, down from $553.90/554.80 late Monday. The dollar strengthened after a core gauge of U.S. inflation for February, core producer prices, rose a more-than-expected 0.3 percent. The data reinforced views that the Federal Reserve may not be finished with dollar-boosting interest rates."

"Gold and the greenback usually move in opposite directions, though the relationship has weakened in the past nine months."

"Platinum fell to $1,035/1,039 an ounce from $1,041/1,045. The metal touched a two-week high of $1,041 on Monday on fund buying. Palladium eased to $314/318 an ounce from $317/321."

Comments:
wow, I just bought 3000oz last month. up 8% from that point already. I wonder how high silver might spike, considering it's still near historical lows relative to gold prices.
 
Word to the wise: My investment in CEF was a mistake. The price has been flat or lower as silver rises. Presumably Gold is weighing it down and silver speculators are dumping it. I just moved most of my funds from CEF to SLW.
 
Also, volume is way too low to be able to get out during a Silver spike.
 
I agree with your sentiments. This is my main inflation hedge, so I wouldn't be looking to jump ship quickly. forget "spike", I guess what I'm really wondering is how high silve will "climb", and if it will be abrupt enough to appear to be a "spike".
 
It's all up from here... let the legal hoarding begin!
 
Congratulations silver bulls!
 
SLW after hours trading:

19:29 $ 9.88 500
19:29 $ 9.89 500
19:00 $ 9.63 400

I don't plan to dump everything on a spike, but probably shift 10% out at each $10 rise. The boards are exceedingly bullish tonight. As the Guru would say: HaHaHa!!!
 
"Silver hit it's highest level in more than 22 years on Tuesday..."

What a stupid bit of analysis. The CPI has nearly doubled in the last 22 years. In order to reach a real 22 year high silver would have to go to nearly $20/oz. And if you believe CPI understates inflation, adjust that number upward accordingly.
 
Oops! Silver would have to go to over $20/oz. to reach a real 22 year high, not "nearly" as I said above.
 
proteus - all the more reason to like this metal. Adjusted for inflation and given the industrial supply shortfalls year after year, this lovely metal is way undervalued. Unfortunately the numismatic crowd has clearly scoured through my 90% dimes and quarters already...

austinyankee - that's a good idea, I might try the slow unwinding like that. It sucked to see my dot crap gains disappear in 2000, and while I don't think that will happen here, you never know. Au and Ag even at these levels are way down from inflation-adjusted 80's prices.

I mentioned gold and silver to my accountant today and he got a bit edgy. Are accountants generally uncomfortable with the idea of a strong hard currency?
 
http://news.ft.com/cms/s/3798ddf6-b948-11da-b57d-0000779e2340.html

From a different news article about the silver eft:

"One silver trader said silver prices may move sideways until trading starts in the new trust, and may fall after it begins trading, as speculators liquidate their long positions, held in anticipation of the SEC approval."

Sideways - like sitting on a 2x6 board across the back of a dumptruck load of silver.

Au & Ag - Wayyy down before going wayyy up. The Brits gotta get theirs back first.
 
SLW has been a real winner for me. After it surpasses $10, I think it will be interesting to see mutual funds picking it up.

I'm sure there will be a mix of hoarding and dumping. I am biased, but imagine more hoarding in light of bad economic trends (housing, inflation, debt, employment, etc).
 
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