Silver ETF (SLV) makes impressive debut

Friday, May 28, 2006
By Benjamin Train

Today marked a strong point of interest in the Precious Metals sector. The long awaited Silver ETF began trading at 7:30 am at $129 a share and ended the day at $ 138.12 a share a $ 9.12 change, or more than 7% percent gain on the American Stock Exchange with more than 2.3 million shares.

I have expectations that we will see a pull-back next week and continued volatility, however the silver sector is now on a new footing. Silver supplies fell 663,216 troy ounces to 123.6 million troy ounces. Each share of the silver ETF represents 10 ounces of the metal held in a vault. The more iShares purchased, the more ounces of silver off the maket, creating higher contract prices due to increased demand.

According to Dale Doelling, Chief Mmarket Technician at Trends In Commodities; "the precious-metals markets are experiencing significantly higher volatility than we've seen in quite some time, and that can signal that a retracement may be in the offing," "But it's looking more like a consolidation at this point and, barring an all-out collapse, the trends in all of the metals markets remain favorable," he said.

SLV is the first silver exchange-traded fund in the U.S. (SLV : iShares silver trust iShares
News , chart, profile, more Last: 138.12+9.12+7.07%) 4:26pm 04/28/2006 Delayed quote data

The Silver Trust, sponsored by ETF giant Barclays Global Investors, has been in the works for more than a year. The ETF is backed by 1.5 million ounces of silver, deposited by Barclays earlier this week.


I have pasted some excerpts from a
MarketWatch article here that I felt you might like to read.

Shares of a highly anticipated silver exchange-traded fund rose as much as 8% in their first day of trading Friday as investors embraced a new way to capitalize on increasing global demand for the grey metal.

Some traders are expecting the ETF may usher in a new bull market for silver if it attracts money from individuals, advisers, institutions and hedge funds looking for a convenient way to get exposure to the precious metal.

If the silver ETF experiences demand similar to the gold ETFs, it may end up accumulating roughly 97 million ounces, which represents more than 15% of known silver inventories, making a tight market even tighter, the newsletter added.

However, if history is any guide, the trend with gold ETFs introduced around the globe has been a run-up in the weeks up to the launch with a pullback in the weeks after the start of trading. See earlier story.

Judging by investor confusion over the tax issues with the existing gold ETFs, it should be noted silver, like gold, is classified as a "collectible" by the IRS -- if held for more than one year, gains are taxed at a 28% rate, compared with the 15% rate applicable to most other long-term capital gains.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA3962FD2%2D20D6%2D48C5%2D80FC%2DBB96523D9196%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

iShares Silver Trust ETF - SLV Approved

Trading SLV.A to begin trading today, April 28th, 2006

SLV - 150,000 shares initially available

iShares Silver Trust to launch on Amex on Friday
Fri Apr 28, 2006 8:41 AM ET

NEW YORK, April 28 (Reuters) - The first silver exchange-traded fund will begin trading Friday morning on the American Stock Exchange, its developer Barclays Global Investors said.

The iShares Silver Trust, which is listed under the symbol SLV will launch when the market opens at 9:30 a.m. EDT (1330 GMT), a Barclays spokeswoman said.

WASHINGTON, April 27 (Reuters) - The U.S. Securities and Exchange Commission said on Thursday that the registration statement for Barclays Global Investors' iShares Silver Trust was declared effective, removing the final regulatory obstacle to trading in the innovative fund. "The registration statement for the iShares Silver Trust was declared effective at 10 a.m.," SEC spokesman John Nester said.

The SEC has Cleared the Barclays Silver ETF (Exchange Traded Fund). The ETF will allow investors to buy silver as easily as they buy stocks, and the trading symbol on the AMEX should be SLV, and could start trading as early as tomorrow, or by the end of next week.

Interestingly, Barclays has only deposited 1.5 million ounces of silver with their bullion custodian, not the 130 million ounces that was anticipated. Thus, the significant silver buying has not yet started, and is still to come, especially as the large pension funds with hundreds of billions of dollars start buying.

Most of the large funds cannot buy silver unless it is in the form of an ETF, and the ETF was built to enable these funds to buy silver. If even 1% of just one of the largest funds is invested into the Silver ETF, it would be over $2 billion, which, at $13/oz., is over 153 million ounces of silver, which is far more silver than is available at the NYMEX, the large commodity exchange in New York.

According to a regulatory filing yesterday, Barclays has deposited the 1.5 million ounces of silver with JPMorgan Chase Bank in London to back 150,000 shares of its ETF with each representing 10 ounces of silver.

Barclays intends to offer to the public these 150,000 iShares at a per-iShare offering price that will vary depending on the price of silver and the trading price of the iShares on the AMEX at the time of the offer.

The ETF is slated to trade on the American Stock Exchange under the ticker "SLV." According to the SEC, the approximate date of the ETF's "sale to the public" will be "as soon as practicable after this Registration Statement becomes effective."

The silver market is not driven by day to day news, but rather, by a trend that is over 100 years long, the trend of demonitization, which started with the introduction of the gold standard, and the end of the use of silver as money. With renewed investor demand through the ETF, silver is being saved as a store of wealth again.

The other long term trend is silver's use in the age of electronics, which is a 60 year long trend that started around the end of World War II. This trend, with the industrilization of China and India, is only accelerating. Silver has been consumed by industry, and there is very little silver left over for any investment demand. Silver prices are sure to go up, up and up some more, probably for decades to come.

COMMODITIES RISE TO RECORD

Tuesday, April 18, 2006 - Market news

Commodity prices rose to a record as concern over Iran's nuclear program sent oil to an all-time high and speculation about rising demand in China stoked buying of metals by investment funds. Copper has doubled to a record in the past year and zinc has jumped almost 150 percent as China's booming economy fuels demand for the raw materials used in cars, homes and appliances.

Commodities Rise to Record, Extending Rally as Oil, Copper Gain
April 18 (Bloomberg) -- Commodity prices rose to a record as concern over Iran's nuclear program sent oil to an all-time high and speculation about rising demand in China stoked buying of metals by investment funds.

Copper has doubled to a record in the past year and zinc has jumped almost 150 percent as China's booming economy fuels demand for the raw materials used in cars, homes and appliances. The Goldman Sachs Commodity Index of 24 commodities rose to a record today, led by gains in gasoil, sugar and natural gas.

``Part of the reason for the strong commodity prices is the fundamental demand out of China,'' said Brian O'Shaughnessy, chief executive officer of Rome, New York-based Revere Copper Products Inc. ``Speculators are feeding on those fundamentals to drive the prices beyond levels that reflect fundamental factors.''

Fund investments in commodities will rise 38 percent this year to $110 billion, according to Barclays Capital, amid speculation their returns will beat those on stocks and bonds. The 11 percent increase in the Goldman Sachs index

The Full Story at Bloomberg:
http://www.bloomberg.com/apps/news?pid=10000087&sid=aaLbI9lOuYWI&refer=top_world_news


Investing In Copper
Five-year ... ten-year ... 20 ... then 25-year ... now ALL TIME highs - copper prices are literally going nuts. The copper bull story is quickly told — and quickly grasped when you see the performance of Phelps Dodge, (one of the world's largest producers of the metal) in the past 16 months: Supply is down - Chile’s production has slipped and new mines aren’t being discovered.

Read the entire article at MoneyWeek:
http://www.moneyweek.com/file/11263/investing--in-copper.html


Record High Oil Prices
The record high oil prices were said to be fueled mostly by heightened concerns that oil exports from Iran would be cut off because of the worldwide political argument over Iran's nuclear program. North Sea Brent crude oil, the type pumped up by Norway, jumped 74 cents to an all-time high of USD 72.20 per barrel, reported Reuters.

North Sea Brent crude oil, the type pumped up by Norway, jumped 74 cents to an all-time high of USD 72.20 per barrel, reported Reuters. US West Texas Intermediate crude oil hit a record USD 70.88. As one analyst in Paris said, "the Iranian situation is making us all very nervous."

Iran is a major crude exporter, and the standoff over its nuclear program threatens its oil supplies. Nearly a quarter of Nigerian oil production, meanwhile, is shut down after rebel attacks two months ago. That puts more pressure on supply.

The effect on Norwegian oil-driven stocks was immediate. The Oslo Stock Exchange set new records as trading ...

The Full Story at -Aftenposten
http://www.aftenposten.no/english/business/article1282235.ece