August 15, 2022

Silver and Gold ETF Holdings Decline Amidst Volatile Trading

In a week of volatile precious metals trading, holdings of both the iShares Silver Trust (SLV) and the SPDR Gold Shares Trust (GLD) saw modest declines.

The holdings of the SLV declined by 130.49 tonnes or 1.2% from last week to 11,053.20 tonnes.  Looking at the daily changes, however, provides a a better indication of the volatility in SLV holdings during the week.

The holdings of the SLV hit an all time record high amount of 11,390.06 tonnes on Monday April 25th.  The substantial decline of 336.86 tonnes over the following two days mirrors the volatile price action of the SLV, which declined more than $2 on Tuesday before recovering to all time  highs at Wednesday’s closing price.

SLV - COURTESY YAHOO FINANCE

The SLV currently holds 355.4 million ounces of silver valued at $16.1 billion.  The SLV is currently the largest silver ETF and has seen tremendous growth in holdings since the Trust’s inception in April 2006, when it held a mere 653.17 tonnes valued at $263.5 million.  According to the Silver Institute, at the end of the first quarter 2011, total holdings held by all silver ETFs was 612 million ounces.

Despite the tremendous appreciation of the SLV, the silver market remains a relatively small market which leads to speculation that silver prices are being manipulated.  Volatility in silver trading over the past week was enhanced by rumors of massive short positions by traders, attempts to corner the market by larger players, and the inability to deliver physical silver on futures contracts.

The recent volatility in silver is likely to continue as additional players are drawn into one of the hottest markets of 2011 and wide price swings may become the norm over the short term.

For long term  investors, the fundamentals of the silver market should overweight any short term volatility.  Sales of Silver Eagles by the US Mint in the first quarter of 2011 was 37% higher than the previous year reflecting continuing investor demand.

GLD and SLV Holdings (metric tonnes)

April27-2011 Weekly Change YTD Change
GLD 1,229.64 -0.61 -51.08
SLV 11,053.20 -130.49 +131.63

Gold holdings in the GLD declined modestly by 0.61 tonnes after an increase of 17.29 tonnes for the previous week.  The current holdings of the GLD amount to 39.5 million ounces of gold valued at $59.7 billion.

Gold hit another all time high today, recently trading at $1,531.  The Federal Reserve ignited a sharp rally in gold and silver after releasing details of this week’s FOMC meeting. The precious metal markets moved higher after the Federal Reserve said it would continue super aggressive monetary policies despite the June wind down of QE2.  The Fed indicated that it would not reduce the size of its balance sheet and would leave short term interest rates at zero.

The Fed also left the door open to future unconventional policy moves if deemed necessary.  Since the Fed cannot move rates below zero, any additional “unconventional easing” would almost certainly mean additional money printing by the Fed.   The US dollar traded lower on Fed comments and is now threatening to break to new all time lows.



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