Monday, January 12, 2009
If only the futures price would catch on to what has been happening over the last year or so at the world's largest silver ETF, the iShares Silver Trust (NYSEArca:SLV). With a massive addition of 218 tonnes on Friday, inventory reached a new all-time high of 7,063 tonnes.
You wouldn't know how popular the metal has become by looking at recent prices, but the level of inventory tells a different story.
The number of "tonnes in the trust" is now almost 50 percent higher than a year ago with the price of silver still down almost 50 percent from its March highs.
According to data from iShares, Friday's big gain followed a 55 tonne increase on Thursday making this the second largest two-day addition since the fund was launched almost three years ago. The previous record was a single-day 279 tonne purchase in December of 2006.
While there have been many claims of manipulation in the silver futures market and many still question whether the futures price will ever properly reflect the real price of the metal (premiums at coin shops are still quite high when they have something to sell), it is good to see investor demand so strong amid the recent price weakness.
This is remarkably bullish. With any signs of a turnaround in the global economy (yes, this might take a little while), silver will likely take off like a rocket.