Silver ETF Selling Mounting

Adam Hamilton profile picture
Adam Hamilton


  • Silver ETF selling is mounting. Since silver’s parabolic surge driven by massive capital inflows from differential SLV share buying peaked, this dominant silver ETF’s holdings have been falling on balance.
  • That reveals American stock traders are exiting silver, selling SLV shares faster than silver is being sold. With SLV’s holdings remaining super-high, they could have much more yet to do.
  • This potential silver ETF selling overhang is a big downside risk for silver. With silver’s high consolidation failing into a correction, downside momentum will accelerate. That will scare SLV shareholders into dumping shares.

Silver’s dazzling parabolic surge this summer was overwhelmingly driven by enormous silver ETF share buying. Led by momentum-chasing millennial traders, unprecedentedly huge amounts of stock market capital deluged into the dominant iShares Silver Trust ETF (NYSEARCA:SLV). But since silver’s resulting lofty peak, silver ETF share selling has been mounting. An acceleration is a major downside risk for silver prices.

Silver has certainly lived up to its wildly volatile reputation this year. Ahead of mid-March’s brutal stock panic driven by governments’ heavy-handed national lockdowns to slow the spread of COVID-19, silver was inconspicuously grinding higher. In late February, before pandemic fears flared in the US, silver was running $18.62. But it was then soon sucked into the epic maelstrom of fear as stock markets cratered.

Outsized stock market fear infecting silver is normal. Herd psychology has an unusually strong influence on silver price levels. Traders rush to buy silver when they grow bullish and excited, catapulting its price far higher. But when they get bearish or worried for any reason, they drop silver like a bad habit, forcing steep plunges. The global silver market is tiny, further amplifying the price impacts of material capital flows.

Over the next several weeks or so into mid-March, silver collapsed 35.8% to $11.96. That deep 10.9-year secular low utterly annihilated all bullish sentiment. And 4/9ths of that plummeting was compressed into just two trading days where silver collapsed 18.9%! That proved a near-crash, crowding the formal crash threshold of a 20%+ loss in two trading days or less. That stock panic totally rebooted silver psychology.

It left silver radically oversold, trading at just 0.704x its 200-day moving average. Anything under 0.90x is extremely oversold and unsustainable. Sub-$12 silver prices were fundamentally ridiculous as well. In Q1’20, hosting that rare stock panic, the world’s major silver miners reported average all-in sustaining

This article was written by

Adam Hamilton profile picture
A lifelong student of the markets, speculator, and investor, decades of experience have forged Adam into a hardcore contrarian. He believes in buying low when others are afraid, then later selling high when others are brave. He founded the financial-market research company Zeal LLC, and continues to write acclaimed weekly and monthly subscription newsletters.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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