Those Stubborn Silver Investors

By Brad Zigler

Gold and silver are both precious metals and therefore ought to move in sync with one another, right?

Granted, silver has broader industrial applications, but it's always been the "poor man's gold." Some traders, however, are looking at the amount of metal covering the iShares gold and silver trusts and thinking, "Hmmm ... that's odd."

Why is it, these traders wonder, that the amount of gold backing the iShares COMEX Gold Trust (AMEX: IAU) has been declining, but the vault stores of metal for the iShares Silver Trust (AMEX: SLV) have held steady?

The amount of metal in the iShares depositories are directly correlated to the number of trust shares outstanding.

Through the end of April, gold's year-to-date spot price appreciation was 0.7%. Over that time, IAU's share float rose 13.9%. Within that trend, however, was a much more dramatic subtext. Since gold's March 18 peak at $1,003-a 10.5% decline through April 30-IAU's share base shrank 3.8%.

Meanwhile, over at SLV, things looked a little different. First of all, there was the price of silver itself. Through April 30, silver's year-to-date gain was much more robust than gold's: 10.3% versus 0.7%. SLV's share base grew 23.4% as a result. And, from the top of silver's price trend at $20.92, from which a 16.3% decline ensued, the number of SLV shares actually grew 4.2%.

iShares Trusts Metals Holdings

 

 

Is there some strange arbitrage at work here?

No, not likely.

The differential in price movements explains a lot of the disparity. Investment demand takes up the vast majority of the iShares trust supply. Gold's headlong plunge under water made IAU a lot less attractive as a hedge for investors. Silver investors, on the other hand, hadn't dipped below the water line. Most treaded water, hoping for a rising tide.

So put away the conspiracy theories. There's no special alchemy at work.

If silver's price trend catches up to gold's, there's likely to be more SLV redemptions.

Comments

[silver wink]

What is the point you are trying to make? Really a confusing article or are you just "treaded water"......

[ussmls7]

Yoou might want to get more sources to base your info. Try goldseek.com, then read Ted Butlers last article. It will open your eyes, the boat, is over loaded, & about to sink!

[ManagingEditor]

The point of the article? Simple: to add context to the stories circulating about the trusts' vault levels. People have been latching onto ideas without much perspective.

That's all.

[silver wink]

"If silver's price trend catches up to gold's, there's likely to be more SLV redemptions."
Gold's price decline,10.5%; silver's price decline, 16.3%; your figures. Which trend are you referring to?
Most investors try to buy low and sell high, that is perspective, and I would venture to say that is why SLV is ADDING units

[bowman711]

Here is one of those 'conspiracy theorys:' www.investmentrarities...

Read both articles and make up your own mind.

[jt]

Although I was giving you the benefit of the doubt that you actually had some well thot-out analysis of the situation, when I got to your "put away your conspiracy theories" line, you lost what respect you had from me. It's quite unfortunate that in our day and age, all that has to be done to discredit ANY evidence or insight or concern and garner to oneself kudos from the self-described "enlightened ones" (normally, I have found, the most ignorant in a culture as they typically draw all their "facts" ArchieBunker-like from the nearly completely controlled mainstream media) is to call it a "conspiracy theory."

If you read this "theory" you'll see it is all based on publicly available EVIDENCE. If you're going to make that statement, which would be setting yourself up as an expert in judgment on the whole topic, then please present YOUR facts that contradict this "theory." Until then, stick to your OPINIONS and your pseudo-analysis, and leave off talking about "conspiracy theories" about which you obviously have very little knowledge or understanding.

And BTW...those of us who HAVE followed the EVIDENCE for years now have continued to buy silver on this artificial, paper/electronic-marke... takedown (read: MANIPULATION) b/c we know that the physical situation is VERY much different from the manipulated paper market price situation. That the investment market for silver has been very tight has been documented quite extensively. That the CFTC actually EXISTS to PREVENT this type of discrepancy and yet does absolutely nothing about it and even denies the existence of a problem simply adds more evidence to the case for manipulation of the price by TPTB--the anti-gold cartel, the Fed and its Treasury and bullion bank lackies, such as GoldmanSuchs and JPMorgain4Elites, along with all the pseudo-govt "forces" such as the "PPT" (The President's Working Group on Financial Markets), the Currency Stabilization Fund, the BLS (Bureau of Lying Statistics).

And BTW2...those reading these articles...STAY AWAY FROM THE ETFs!!!!!...buy PHYSICAL!!! The ETFs by all that we can now know, were set up to be able to draw off silver and gold from them by the bullion banks behind them in case of delivery problems or to control price on the market by dumping thru the backdoor. You should read the fine print...unbelievable how all this is couched in every kind of obfuscation you could believe. You have counter-party risk there. I do understand using it as an investment vehicle, but if you actually invest in silver (and gold) as a hedge and a preservation of value, know that in the actual event of a default on delivery of silver, the ETFs have provisions for basically declaring "force majeure" and you're out of luck. In that case, your dollar will have already lost another significant chunk of its (even now grossly inflated) value, and you will no longer have silver (or gold)...just paper money...whatever it will be worth at the time. Holding physical is the only sure way to know you have real money that will hold value. jt

[Silver-Bullet]

Mitsui developed a new catalyst for diesel engine cars that replaces the use of platinum with silver.

"Silver will totally replace platinum in this new autocatalyst that we've developed," a company spokesman said.

www.reuters.com/articl...

Get physical folks, get physical!

[tireman]

Amen Brother! I've been filling my strongbox for 2 years now. Buy some kind of physical silver.

[GMiki]

Go, silver. And, sure, have some physical silver in the house, but the stuff is heavy. So you decide how else to maintain your silver. I have SLV and silver juniors, as well as SLW. Don't put all your eggs in one basket. Unless you're like Jason Hommel and can have your own off-site vault.

[Kiwi_Envoy]

Silver and Gold are political metals subject to manipulation in order to make government fiat currencies look good.

Fiat currencies are debt instruments designed to enslave.

If the writer thinks the price action is acting in a free market then he has not woken from his dream.

[oro-plata]

I disagree that ETF's are a bad investment. CEF, Central Fund of Canada holds 10oz's of Real Silver for every once of Gold. It is accounted for and has been in existance since 1961. Gold will soon hit $2,000 when Oil reaches $200 per barrel.

[ManagingEditor]

The "trend" to which I refer, silver wink, is the price action that puts an investor underwater.

Silver's price appreciation, prior to the break in March, was more robust than gold's. Even though silver's subsequent decline was steeper, silver was still holding on to a respectable year-to-date gain through April 30 (10.3% vs. gold's 0.7%).

If THAT differential closes, I'd expect to see SLV redemptions rise.

[ManagingEditor]

For the week ending Thursday, the gold/silver ratio widened 1.4% to 52.6-to-1. The ratio last peaked at 57.3-to-1 in December before tumbling to 47.4-to-1 in early March as silver and gold reached their record-setting zeniths.

[User 198722]

"jt" you couldn't have said it better.

You want my advice?

Re-read what JT said a couple of times for it to sink in.

I agree completely.

In this day & age that people have discovered most "consp. theories" are actually true and the government and others use that label to discredit cold hard proof - so anytime you mention that word, you loose ALL respect and credibility and sound as if you are "one of them."

HOLD PHYSICAL GOLD & SILVER!

SILVER WILL % MUCH MORE LOOK WHAT IT HAS DONE PAST FEW DAYS:

19th - 1.~~%
20th - 4.07%
21st 1.93%
22nd 0.~~%
23rd 1.34%

Depending on the times I checked they could have closer higher/lower.

Buy 20-30 times more silver in weight than gold.

But buy PLENTY of gold.

And food!

And ammo!

For the coming Martial Law in the USA!

PLEASE LOOK IT UP GOD DAMNIT EVEN IF IT FOR THE SAKE OF PROFITING FROM THE PLANNED DOLLAR COLLAPSE (FOR THE AMERO) and the end of the U.S. (for the NAU - North American Union - Canada/Mex/US).

Don't listen to disinfo agents like this writer & don't for one minute think those peaks were silver & golds highest price.

Silvers real value in terms of dollars is higher than $200 and gold is $2500 if you factor in inflation for those highs.

Also taking into consideration the manipulation by the Rothschilds and other people who hold most of the metals - you can bet your last ounce that their true value is much higher than cash can ever measured (they've admitted this publicly).

After all once the U.S. dollar is dropped... not even $1,000,000,000,000,000... will buy you my ounce of silver. Even if you came to me right now with the dollar still "running" - although not well - with double the value I would still not sell.

Unless I sold for double price then put all that money back in silver therefore doubling my stash (or gold).

Silver+ Gold = THE ONLY REAL MONEY THAT HAS EXISTED FOR 5000 YEARS!

Paper Money = Monopoly money = Toilet Paper

Credit = Numbers on a screen.

Use that monopoly money and digits on a screen to buy whatever REAL MONEY YOU CAN BEFORE IT'S TOO LATE!

[User 198722]

***********
The post above is the most important post you could read all year
***********

No website, no name - I don't want your money or anything.

I want you to use your head.

Research research research from 30+ media sources (NOT MAINSTREAM tv radio or yahoo/msn (unless for searching) and come to your own conclusion.

But by then you will have wasted the time I'm trying to save you!

believe it, fellow sheep :)

[ussmls7]

AMEN!!198722