Money Flow Turns Positive for SLVMoney Flow Turns Positive for SLV
By Gene Arensberg
18 Jun 2006 at 09:07 AM EDT
HOUSTON (ResourceInvestor.com) -- Silver holdings for iShares Silver Trust [AMEX:SLV] increased by 93.2 tonnes over the past week from 2,082.9 to 2,176.1 tonnes of silver bars held by a custodian in London for SLV investors.
The trust is a continuous offering exchange traded fund designed to track closely with the price of silver. Each share of SLV approximates 10 ounces of silver metal. The amount of metal holdings and the number of shares of the trust fluctuate according to the price of, and demand for the shares relative to the price of silver. The trading vehicle only invests in silver metal and does not use futures, options or derivatives.
SLV began trading on April 21, 2006 after a months-long period of anticipation and quickly ramped up in silver holdings to 2,270.31 tonnes by May 18, at the time worth just under $1 billion. By June 7, the trust had sold back into the market 187.41 tonnes to 2,082.90 tonnes held. Negative money flow for the silver ETF apparently stopped June 7 because the amount of metal stayed constant from then until June 14 when the trust began adding silver again. It added 46.6 tonnes of silver both Wednesday and Friday of this week.
The price of silver peaked May 11 at $15.21 and then began a sharp retrace. It closed Friday at $10.24 after changing hands as low as $9.48 mid-week. At its recent nadir silver had given back 37.7% from the May 11 peak.
The recent sharp plunge in the silver price has apparently triggered increased interest and a return to positive money flow in the silver exchange traded fund from bargain minded investors and speculators.