Silver ETF Starts Off the Year Strong: Can It Continue to Shine?

iShares Silver Trust (SLV) outperformed every other ETF focused on metals during the first quarter of 2008—indeed, it was one of the top-performing ETFs across the entire market. SLV’s nearly 21% return even outperformed gold funds during a period when the price of gold topped $1,000 per ounce for the first time in history.

The fund easily outpaced the stock market as well. The first quarter was one of the market’s worst in recent history, as losses swept across almost every type of stock and the S&P 500 posted a 9.5% decline. A handful of commodities bucked the trend, causing commodities-oriented ETFs to cluster at the top of the ETF Momentum Tracker Table. SLV last week held the top spot for the eighth consecutive week. Despite losing some steam in recent weeks, the fund remains one of the hottest ETFs on the table.

Before SLV was launched in April of 2006, there were a handful of ways investors could include exposure to silver in their portfolios. They could purchase the metal itself, buy futures contracts in the metal, hold stocks in companies with direct exposure to silver prices or invest in funds that focused on those companies. SLV offers a simpler and easier means for most investors to gain direct exposure to silver. When you buy a share of SLV, you are buying a stake in a cache of silver bullion stored at the London branch of JPMorgan Chase. The price of each share of SLV should reflect the current price of ten ounces of silver, minus the fund’s 0.5% operating expense. If silver prices go up, shares in SLV go up.

SLV’s method has proven extremely popular— so popular that the fund is considered to be partially responsible for the steep climb in silver prices since the fund’s inception. The fund has accumulated more than $3.3 billion in assets, allowing for the purchase of more than 5,776 tons of silver. In part, the ETF’s success reflects the fact that silver has taken on part of gold’s traditional role as a hedge against inflation and financial crisis. With gold trading near all-time highs in recent years, silver, which hasn’t come close to the record highs it reached during the late ’70s and early ’80s, also appears to have more potential for upward mobility. Silver sold for $49.45 an ounce at its highest in 1980 but traded at just $17 an ounce as of April 21.

Morningstar analyst Sonya Morris makes the case that investors would be better off turning to SLV for purposes of diversification rather than as a hedge against inflation. Unlike gold, silver has numerous industrial uses, making its pricing far more prone to fluctuate due to the stops and starts of the overall economy. Demand for silver has increased steadily in recent years as rapidly expanding emerging economies have used the metal in the manufacturing of refrigerators, batteries, semiconductors and other products. Furthermore, Morris points out that precious metals aren’t necessarily much better than stocks at outpacing inflation. “A better argument for investing in this ETF is for diversification purposes, since silver prices aren't correlated with stocks,” says Morris. “But to benefit from those properties, you need a long-term view and a stomach for some volatility.”

When the stock market is hurting, silver’s lack of correlation with the stock market makes its volatility a bit easier to bear. Make no mistake—SLV is certainly independent and volatile. While the MSCI EAFE index of foreign stocks lost 3.12% for the 12 months ending April 18 and the S&P 500 lost 3.70%, SLV shot up more than 27%. Similarly, SLV plummeted nearly 9% during the month ending April 18, while the EAFE gained almost 7%. SLV is too young to have produced any reliable risk measurement data, but silver prices are notoriously volatile, and there’s every reason to think this fund’s performance will be as equally prone to gyrations as the commodity, itself.

Silver prices hit 28-year highs in March and then pulled back sharply as the dollar strengthened and prices on a range of commodities weakened. Still, many analysts are bullish on silver, with some predicting prices of $30 per ounce before the year’s end. If inflation continues to loom as a threat to economies around the world and industrial demand for silver remains high, the rally for this metal might just be getting started. But if the gloomy economic conditions of recent months fade and the U.S. dollar strengthens, it’s questionable whether precious metals can continue to thrive. If the bleak first quarter of 2008 turns out to be an isolated correction in the stock market, SLV’s rally could be just as short-lived.

Comments

[Ames Tiedeman]

Silver is on the road back to 10. This is a short.

[Buffy]

You probably meant 184.5 Million not Billion Oz for SLV holdings.

[KOSANN]

THE CONCENTRATED SHORT POSITION (8 TRADERS) ARE SHORT 80%
OF THE TOTAL SHORT POSITION. THEIR SHORT POSITION IS SO LARGE THAT THEY ARE TRAPPED IN A TRAP OF THEIR OWN MAKING. THERE IS NO ABOVE GROUND INVENTORY OF SILVER IN ANY CENTRAL BANK IN THE WORLD. THE SHORTS WILL HAVE TO COVER, WHEN THEY DO THE SKY IS THE LIMIT FOR SILVER. THE HOLDERS OF SILVER ETF'S ARE LONG TIME HOLDERS. THEY WILL
PROFIT IMMENSELY. THE ONLY SUPPLY OF SILVER IS THE COMEX.
WHEN PRICES RISE THE USERS WILL RUSH TO BUY AND DRIVE THE
PRICE HIGHER AND HIGHER. THEY CANNOT OPERATE WITHOUT SILVER.

[Tao]

Silver is needed for solar power, too, or at least that is what I have heard.

I tried to hang onto my SLV. I had made money on it, then it started falling and wiped out my profits. I was still determined to hang on, then it started eating up the invested money.

I knew when I sold, it would come back, but I couldn't take the chance with retirement money.

That is another reason the rich get richer and the rest of us don't. If I had been rich, I would have let SLV ride until it went up. Losing money in the market can change my lifestyle, so I jump out when I start losing, usually too soon. Every once in awhile, I hang on, but finally sell and then it goes up 2 days later.

I am really sick of this market.

[bearfund]

Sigh. No one who uses the 1980 price as a comparison point has any credibility. In 1980 the Hunts were trying to corner the market and the end of the stagflationary period had all metals sky high. Moreover, the people who don't like to see high precious metals prices have had 25 more years to perfect their manipulation and they are now quite effective. It wasn't until silver reached the ridiculous level you cite that margin requirements were raised in 1980. This year they've already been raised 5 times, and will no doubt be raised again on any major breakout from the current downtrend. Expensive gold and silver, you see, remind people that their fiat currency is worthless paper. We can't have that. I do not expect to live long enough to see $50 silver unless someone comes up with some world-revolutionizing industrial process that requires it - say, a process for making $1 a gallon gasoline out of used gym socks. It's quite true that aboveground stocks of silver are virtually nonexistent and that the metal has a number of important industrial uses already. But absent investment demand - deliberately curtailed by the central banks - it's just not going much higher.

[peter H.]

1. Silver (and Gold) ETF's are been opened around the world; would they do that if they expect poor business in future on silver?
2. Silver users and comex play together "short" to suppress the price since there is no real substitution for industrial applications of silver,if there would be it would already been installed and the massive documented short possition on the comex would loose their purpose of existence.
3.all this nervous,greedy short term analyse by "experts" on silver (and other markets) always forgett long term fundamental facts: we used 90% of the existing silver inventories in the last 30 years, to build that up again we might need at least a generation's time and have total other exploration/production costs...
So meanwhile I go long on silver and add positions on the dips caused by the selling of the same short thinking, nervous greedy people and our friends at the comex.

Want to know the real story on silver ? Read Morgan & Butler

[KOSANN]

TAO - YOU WILL ALWAYS BE POOR. IN ORDER TO GET RICH, EVEN IF
YOU ARE RETIRED, YOU MUST UNDERSTAND WHAT YOU ARE BUYING AND FOR WHAT REASON. A FRIGHTENED RABIT WILL ALWAYS BE
FRIGHTENED. IF YOU HAVE NO KNOWLEDGE, YOU DO NOT BELONG IN THE MARKET IN ANYTHING. THIS GOES FOR YOU AND ANYONE ELSE, INCLUDING BEARFUND. I HAVE ALWAYS FOUND THAT THE LEAST INFORMED PEOPLE, HAVE THE MOST DEFINITE OPINIONS.
THEY GET THEIR INFORMATION FROM CNBC, OR BLOOMBERG. BOTH ARE SOURCES OF MISINFORMATION.

[marxbites]

KOSANN tells truth - EVERYTHING on TV is only about multi-national & banking profits. Propaganda and mind control have figured into their equation for at least 100 years in govt, media and academe, just look up Edward Bernays!

No instance in ALL of HISTORY exists where fractional reserve banking or forced "legal tender" laws was not fraudulent in purpose and fact. Always it has singularly been for robbing the people.

FAME has the straight dope - smart people will read it and act accordingly!!

Stop the fiat money fraud;
protect your savings, your pension, and your job; and,
re-establish a system of honest monetary weights and measures.

The Foundation for the Advancement of Monetary Education (FAME) is a 501(c)(3) public foundation whose mission is to educate people about the benefits of honest monetary weights and measures, as opposed to arbitrary—and fraudulent—(fiat) money which all of us are compelled to use.

The Danger From our Fraudulent Fiat Money:

Corruption of the political process and the loss of representative government;
Concentration of wealth in fewer hands;
Loss of savings and pensions for ordinary people;
Loss of jobs for ordinary people;
Collapse of our economic system along with mass hardship and suffering;
Social unrest and discrediting government;
A change in the basic form of government, possibly to tyranny.

At the present time, ordinary people have no way to get authoritative information about the perils of fiat money and how they are being defrauded by it. FAME distributes and makes known that information in ways that ordinary people can relate to.

Honest Monetary Weights and Measures—which is almost always Gold-as-money—is the Solution Because it:

Is the principal form of preserving wealth—pensions and savings—for future needs;
Protects property rights of people who produce wealth—primarily working people;
Causes real wages to be higher;

Facilitates real economic growth;

Keeps prices stable and/or gently declining;
Encourages saving and thrift;
Helps keep jobs secure;

Increases the number of good-paying manufacturing jobs;

Discourages debt;
Eliminates great booms and busts, as with the Great Depression;
Reduces the likelihood of war;

Makes for a stronger national defense capability;

Enables social mobility;
Makes it more likely that the people who produce wealth will be able to keep it.


FAME is particularly oriented toward working people because they are the principal victims of the fiat money fraud. As paper-ticket-token money, as we have in the U.S., melts all around the world, including in Russia, Malaysia, the Philippines, Indonesia, South Korea, Brazil, Ecuador, Mexico and elsewhere, rich people become less rich and professional people earn less. Working people, however, lose everything. They lose their savings, their pensions, and their jobs. The suffering is palpable. It is our expectation that by helping to lay the intellectual groundwork for a return to an honest monetary system, we can help preclude and ameliorate that suffering.

People should also be mindful that an implosion of our monetary system could very likely result in significant backlash. Recently I reread John Maynard Keynes' remarkable The Economic Consequence of Peace, which he wrote in 1919. As some may recall, Keynes had been an official representative at the Paris Peace Conference and deputy for the Chancellor of the Exchequer on the Supreme Economic Council after World War I. This book was his critical review of the resulting Peace of Versailles Treaty.

At one point, he wrote about the suffering in Germany and Austria, partially a result of the creation of too much paper-ticket money by the authorities, which he called a "fraud upon the people." There was a relatively small amount of gold backing the German and Austrian currencies, and the French wanted to seize it as part of the reparations. Contemplating the disruption of what Keynes called the "delicate and immensely complicated organization" of commercial relationships and the continuing economic chaos, he wrote fateful lines (some small paraphrasing by me):

"But who can say how much is endurable, or in what direction men will seek at last to escape from their misfortunes? Men will not always die quietly. For starvation, which brings to some lethargy and a helpless despair, drives other temperaments to the nervous instability of hysteria and to a mad despair. Some will seek revenge... "

"The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become profiteers, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat."

It is urgent that citizens of good will do whatever possible to preclude that ordinary people do not lose their savings, their pensions, and their jobs because of what is, in essence, a giant monetary fraud.

Honest Monetary Weights and Measures
is the Choice of Ordinary People:

Whenever Americans have had the chance to choose the medium of exchange, they have always chosen gold- and/or silver-as-money. An honest monetary system has competition: fiat money. The creators of fiat money—banks and central banks—despite their vastly inferior product, have succeeded because of coercion, misrepresentation and nondisclosure, and also in part because proponents of honest monetary weights and measures have left the playing field. They have failed to promote the benefits of an honest system, and they have failed to expose the fiat money fraud.

We believe that once the facts are on the table, people will once again insist upon honest monetary weights and measures. (There are compelling reasons why the commodity money of choice is gold-as-money. These reasons are more fully discussed in various publications included in this website. See, especially an Interview with Lawrence Parks, FAME's Executive Director. However, FAME's mission is just educational. If, after learning the facts, people wish to use something other than gold-as-money as the medium of exchange, that should be their choice.) To put this another way, we are in favor of a fully-informed electorate and participatory democracy.

FAME's Strategy:

Promote the benefits of honest monetary weights and measures while challenging the coercion, misrepresentation and nondisclosure (fraud) that make fiat money possible. This strategy recognizes that in America the media sets the agenda. As people begin to be concerned about the public policy issues associated with our fraudulent fiat money, the media will perceive that money is an issue, and politicians will begin to address it. The money issue will become self-sustaining. Emphasis will be placed on the following public policy issues:

Corruption of the political process by campaign “contributions” from the financial sector and from large corporations with money created out of nothing, whereas ordinary people have to work for the money they contribute;
Concentration of wealth in fewer hands;

Wealth transfer from ordinary people to the banking system and other segments of the financial sector;

The monopoly that the banking system, especially commercial banks, has on creating fiat money along with special privileges that no other segment of society enjoys (the concept of a legal monopoly is repugnant to the American sense);
Systemic risk that results from the special privileges and guarantees given the banking system that encourages it to take inordinate risk that its principals would not take if their own money were at stake. This puts ordinary people, who do not share in the rewards of the banking system’s risk taking, in danger that there will be an implosion of our economic system along with massive unemployment, loss of savings, and loss of pensions.

FAME’s Commitment and Specific Program:

As a not-for-profit foundation dedicated to full and honest disclosure about the perils of our fraudulent fiat money monetary system and the benefits of honest monetary weights and measures, FAME is uniquely positioned to execute this strategy. FAME’s principals have the knowledge, ability, strategic relationships, emotional commitment, drive, and the enabling vision to achieve an honest system.

We seek two immediate actions:

Repeal of the legal tender, a.k.a. “forced tender,” laws; and,

An end to the misrepresentation--which is what helps make it a fraud--of our money as being “Federal Reserve Notes.” We want them to be relabeled what they really are: “Federal Reserve Tokens.”

The Right Thing to Do:

People who want the benefits of living in a free society, and who believe in the heritage of the American ideals as set forth in the Declaration, should join the fight for honest monetary weights and measures because:
It is best for ourselves;
It is best for our families;
It is best for future generations;
It is best for our country;
It is based on truth; and, most important,
Joining the Fight for Honest Monetary Weights and Measures is the right thing to do.

We very much appreciate your time and your help.

Sincerely,

Larry Parks
Executive Director, FAME
Member: Workers Education Local 189, CWA AFL-CIO
Member: National Writers' Union, UAW Local 1981, AFL-CIO

Foundation for the Advancement of Monetary Education, Ltd. 501(c)(3)
Box 625, FDR Station, New York, NY 10150-0625
Tel: [phone] Fax: [phone]

Definition of terms:
Fiat money is money that is created out of nothing and without any work, usually by banks or central banks. The reason we say it is fraudulent is because there is material misrepresentation and nondisclosure associated with it (See: What the President Should Know About Our Monetary System). If it were not for the misrepresentation and nondisclosure, along with laws that compel people to use it ("legal tender," a.k.a. "forced tender"), fiat money would be perceived as bogus, and hardly anyone would use it, let alone save it and permit their pensions to be denominated in it. Commodity money is a physical thing, such as gold or silver. It takes work to create it. Because gold has been the commodity money of choice since antiquity, FAME uses gold synonymously with commodity money. Of course, people may choose whatever they wish to be the unit of account and the medium of exchange.

[marxbites]

And get a load of this VERY informative conversation!

www.netcastdaily.com/1experts/exp110902.ram

[REBEL]

On SLV: Look who controls the ETF SLV - JP Morgan Chase. They have debt of over $7 for every $1 in deposits, (highest ratio of any US major bank). At the worst they are simply taking investors' money for non-existent silver. Ever notice how the major banks of the world introduce most of the ETFs? At the very least Chase is skimming SLV's gains to put in their own coffers to offset their horrendous losses. How does my DBA ETF, (100% food), lose money when a global food crisis is threatening hundreds of millions of the world's people with starvation?

[REBEL]

Simple - it is run by Deutsche Bank - one of the world's largest banks
and taking some horrendpus losses themselves.

[ussmls7]

Al Korelins radio interview with GATA, tells it all. All need to listen, GATA.org , It will give a good insight of how the pigs are feeding ! Like it or not, they still have bombs to toss, but sometimes they blow up before expected ! It will only take one, the will the FED Fleece the Tax payer for more? Paper silver is just that, if you believe JP Morgan Chase, then you need to go to GATA.org and read & understand what you are up against!

[Ames Tiedeman]

The silver and gold rallies of 2008 are over. With the IMF now selling gold the ceiling is in, for now.

[Buy Silver]

I'd like to make an analogy to a movie filmed in 1989. Titled Weekend at Bernie's. In this analogy Bernie the corpse, will be played by the world economy. And Andrew McCarthy and Jonathan Silverman's parts, will be played by Federal Reserve Chairman Ben Bernanke, and Treasury Secretary Henry Paulson...

Act 1...

Benny and Hendew are just hanging out on the beach. Soaking up the rays at Bernie's big, lush villa... But there's a small problem... Bernie is a dead bloated smelly corpse. Everything will be cool, So
long as no one notices the green bile pouring down his chin. Or, that
the top of his scalp is peeling off... Or, that crows ate both of his
eyeballs.. It's no small task, but thankfully it's only a made up
movie, in the response section of an article about pieces of paper,
that claim to be redeemable for real tangible silver. JP Morgan's
guarantee is good enough for me!! Doh!!! Didn't they just buyout Bears Sterns with freshly printed greenbacks, to prevent a derivative meltdown to the tune of trillions... Sounds like a good place to store my silver! Doh!!

This world is silly. Anyway, Back to the made up movie.

So Benny and Hanky are sipping margaritas, and getting ready for
a big party, with a bunch of high priced Hos. You can see that Bernie's foul odor, and disgusting appearance is putting a slight damper on their high hopes for the evening. They got him propped up on a broom, with some sunglasses on, and Benny's on the phone trying to get a hold of some flesh colored paint, to brush on the world economy's rotten face, so he'll look his best for the party.

In walks the Notorious Alan G(reenspan), all done up for the
party, with his new Testonis. His group of hairs, all pushed in the
same direction, and held in place with a little tongue spit. Benny and
Hendew are like, "What's this mother f*cker doing up in here?!? This
is the fool that f*cked it up for everybody. It was his f*cking
backstabbing and freeloading, that led to Bernie's heart attack in the first f*cking place...And on top of that, he's a cock blocker." But
alas, the Notorious Alan G.S.P.N. has a magic ability, to pretend to
not notice, that it's obvious to the world, that he's an economy
wrecking, cockblocking scumbag. And if he didn't have that power, he'd be ashamed to ever show his face in public again, but he does, so he still does. unfortunately.

Then... Finally something interesting happens. (This is where it
veers off from the original movie, and I venture to create my
masterpiece) In walks Precious Metals... PM, I've decided, is played
by Elisabeth Shue. Who You'll remember, was Karate Kids girlfriend.
And also note, that this movie's time frame is the late 80's, so she's
young, smoking hot, and shes gonna be hot for years to come.
Adventures in Babysitting, Leaving Los Vegas, and some recent stuff. You have to admit, she still looks good.

With that said. Benny is super stoked, cuz he's been wanting to get
in her pants, ever since he saw her out on the beach in her swimsuit, and tripped over the fat guy, while walking backwards, and eying her under the shade of his hand. He sees she's looking extra super smoking hot today, with a halfway see through dress that hugs her voluptuous figure. She's working it like pretty women...

...And then. before you can say Alan Greenspan cockblock. There's a bone snapping sound, and Bernie cracks open like a rotten egg!! The stink that pours out of him, totally kills the mood, and Precious
Metals starts screaming and freaking out... Now she knows the world economy is a dead smelly corpse, and if anyone hears her screaming, it's gonna totally ruin the weekend, and the slut party they got cooking up. So Benny, Hendoo, and Al, do what any raving lunatics would do in their shoes. They each grab a bottle of booze and start clubbing Elisabeth Shue over the head. And this is where the movie takes a little science fiction twist. Even though they bust several unopened bottles of brandy and scotch over her head, she doesn't get hurt. She's unconscious, and they're shoving ruffies down her throat, but she's relatively unharmed.? And here's the Sci-Fi twist... It's cause she's a frickin Superhero!! Like the cheerleader on the show heroes. And what's more, when she wakes up, Precious Metals, AKA. a sexy young Elisabeth Shue, is gonna remember that Bernie, AKA the world economy, is really a corpse. And that Ben, Hank, and Al are some creepy dudes. And then she's gonna shoot lazers out of her tits. Won't that be cool!!