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Silver funds like SLV, PSLV, SIVR and DBS are all up 50% and more year-to-date. Money's still...

  • Saturday, April 23, 2011, 8:45 AM ET
    Silver funds like SLV, PSLV, SIVR and DBS are all up 50% and more year-to-date. Money's still pouring in to chase that performance - SLV now holds about one-third of the silver bullion on earth, and Sprott's fund is getting a 22% premium to NAV - but investors may want to double-check the appealing tax treatment and redemption options, so they don't get burned by the hot metal.
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This news story has 22 comments:

  •  
    Can you say "irrational exuberance"....
    23 Apr 2011, 08:58 AM Reply Like
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    Can you say "prudent monetary policies"?
    23 Apr 2011, 09:16 AM Reply Like
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    The only measure of conviction is where you have your money. I have minor amount of money in physical assets (gold and silver), which places me in the 'bubble' camp. So far, I have been wrong, in the sense that I could have made more money in this market with metals.
    23 Apr 2011, 09:21 AM Reply Like
  •  
    Heretic! Burn him!
    23 Apr 2011, 09:31 AM Reply Like
  •  
    Keep telling yourself that silver is going to the moon....

    I am already hearing pundits, claiming that silver at $150 an ounce is fairly valued....
    23 Apr 2011, 09:20 AM Reply Like
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    Well... I hold some bought at $15.

    I don't see any tightening from the Fed, and the China revaluation is only going to increase inflation. I'm out till June when QE2 ends. We'll see what happens to interest rates when the Fed stops buying.
    23 Apr 2011, 09:31 AM Reply Like
  •  
    I've not heard $150 as a "target" for silver, but HAVE heard $94 a couple of times. That was based on a 16:1 gold silver ratio.
    23 Apr 2011, 09:38 AM Reply Like
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    Adjusted for inflation I believe that the 1980 silver high of $50 would equal about $140 today. I'm very interested to see where silver goes, I'm expecting up in the long term but a bump ride is always possible... Although it's been pretty smooth so far. Either way buckle up it going to be wild, if it isn't wild enough for you already.
    23 Apr 2011, 10:19 AM Reply Like
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    Michael Bronfman,

    I agree that silver may have a way to run yet, but if that $140/$150 target is based on the 1980 high, inflation adjusted, as you say, that would suggest that target won't be hit.

    I say that because the 1980 high was the result of the Hunts' attempted corner of silver, rather than "normal" market conditions.
    23 Apr 2011, 10:35 AM Reply Like
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    I read this article yesterday - for me, the key takeaway:

    "The iShares fund has tripled over the past year, to $16.6 billion. It is now the 12th-largest exchange-traded fund in the U.S. and holds about one-third of all the silver bullion on earth."

    This one ETF, NOT central banks, NOT industrial institutions that need the metal, holds 1/3 of ALL the bullion. This smells so much of a speculative binge that I'd be scared sh*tless if I was holding any silver right now.

    In comparison, GLD holds about 12% of the gold that the Fed holds, which holds about 1/4 of the world's central bank holdings, which hold about 1/4 of all the gold ever produced. Gold has room to grow...not so sure about silver...
    23 Apr 2011, 10:37 AM Reply Like
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    I am not trying to pick a specific price just laying out the numbers. I have read a bit about the Hunt's attemtped corner. It was done for the same issues that are becoming prevalent today. Namely inflation with a stagnating economy and they did not believe in the fiat currency that had be debased from the gold standard. The same time this 'cornering' occured gold rose to $850. Gold was not cornered and adjusted to inflation would be about $2200.

    I also don't believe silver is in "normal" market conditions but that is a seperate conversation. Just in response to the Hunt Brothers cornering a look at the price of gold at that time adjusted for current inflation is important.
    23 Apr 2011, 02:10 PM Reply Like
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    If they "actually" own 1/3 of the bullion, pray tell where is the CFTC? If it smells, walks, talks, and quacks like a illegal position................!
    23 Apr 2011, 06:36 PM Reply Like
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    I have a couple of .9999 10 oz. gold bars, and probably would never sell it because I have it as a family heirloom....

    The problem is,that the retail investor is probably going to be burned again...
    23 Apr 2011, 09:46 AM Reply Like
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    The slow rate that the Fed can/will increase interest rates in order to save the USD will not keep up with the rate of the dollar decline anytime soon. (yes I know that is not the Fed's mandate but that is the effect it will have) Therefore, I see this bull run in the metals and commodities running for a long time. I look at it this way. I have about 10% of my portfolio in the physical silver and 30% in the SLV right now. If the dollar continues it's crash, then I will do well. If it crashes completely I have enough physical for the necessities. If it recovers and my country's dollar strength is restored, I will happily lose a percentage of the value of my physical and exit SLV before I incur large losses (hopefully :) ). All of this does not take into consideration the demand from overseas (specifically India and China), industrial demand increasing, the fact that silver needs to rise in order to meet the historical 16:1 ratio, unrest in the middle east, and (as I have read) rapidly diminishing supply of the physical metal. Any one of these taken alone combined with the difficulty to get a mine up and running quickly in order to meet demand, seems to put the metals (silver specifically) to be a very safe bet for a while.
    23 Apr 2011, 10:09 AM Reply Like
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    At least you are demonstrating your conviction with money in the asset. In fact, that is a very large bet in a portfolio. I've never had that much conviction in any one asset, though I suppose with 65% of mine in equities, I could be said to have an asset class bias.
    23 Apr 2011, 10:27 AM Reply Like
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    Don't take me wrong, Silver should continue to go up...deep into the 70s but it wouldn't reach the phony target prices of $100-150-200...exagger... and wishful thinking
    23 Apr 2011, 10:27 AM Reply Like
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    I won't pick a price. All fiat currencies in history have ended the same
    23 Apr 2011, 11:07 AM Reply Like
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    Those of us riding, no, driving this train are making real nice gains. Capital gains are gains all the same, and one may agree that to pay taxes is fair and there is no good alternative. You are paying too large of a vig to participate in a closed-end fund, in my opinion. Paying taxes isn't pleasurable, but least we are not losing all of our money's value to inflation.
    23 Apr 2011, 11:19 AM Reply Like
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    Its amazing how everyone seemed to have bought SLV at $10-$15. Now on a serious note, SLV has had a $146 million dollar net outflow in March so i am not sure who is chasing the etf. And if paying the tax man is a problem then i suggest putting it into IRA's and worry about it later.
    23 Apr 2011, 05:33 PM Reply Like
  •  
    Even if it is bubbling when it pops it will maintain a reasonable amount of value (dollar debasement etc).

    Just remember you can't time the top.
    23 Apr 2011, 05:37 PM Reply Like
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    After reading the SLV prospectus again I have revisited every disclaimer imagineable sighting the numerous environments that will diminish the etf value not limited to having insufficient funds to pay expenses and closing up shop and going home. Now we all know that this is found in just about all mutual funds but some of the acknowledged reasons for losing value have nothing to do with the actual physical bullion worth. I certainly feel this particular etf has legs to run but corrections and pullbacks forming new resistance levels is definitely in the cards. I am long this etf and physical as long as the call options continue to out number the put options, when that changes then i am out until further notice. lol
    23 Apr 2011, 06:40 PM Reply Like
  •  
    Reasonable. But how do you know puts aren't being net sold to profit on, as the metal continues its climb ?
    23 Apr 2011, 11:23 PM Reply Like
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