Is Silver ETF Loosing Lustre?

The silver exchange-traded fund (SLV) will over time reflect demand for the metal and 2006 showed some weakness. According to the Silver Institute, total demand for silver dipped 1 percent last year to 911.8 million ounces from 925.6 million ounces a year earlier and silver jewelry demand falling 5 percent to 165.8 million ounces. Silver demand slipped in 2006 due primarily to the 58 percent increase in the metal's average price.

But while demand for silver consumer stuff declined and silver usage in photography slid 10 percent to 145.8 million ounces, the use of the metal in industrial applications, particularly electronics, climbed. Industrial demand rose 6 percent last year to 430 million ounces.

On the investment side, an AP report noted that demand surged ahead of the launch of the first silver exchange-traded fund, Barclays' Global Investors iShares Silver Trust Exchange Traded Fund, in April. But after the subsequent steep run-up in silver prices, some investors took profits and the market retreated. Investor demand totaled 64.5 million ounces in 2006, down 17 percent 77.2 million ounces a year earlier but still well ahead of the 46.6 million ounces counted in 2004.

The launch of the iShares Silver Trust ETF last April gives retail investors easy access to the silver market helped send average prices rocketing 58 per cent to a 26-year high. The ETF, launched with just 1.5m ounces of silver in trust, held 120m ounces at the end of last year and now holds more than 135m ounces. Global silver supply amounted to 912m ounces last year, according to the 2007 world silver survey released by GFMS on Wednesday.

Year-to-date (SLV) is up 3.7% after gaining 0.47% yesterday.

By Carl Delfeld of the Chartwell ETF Advisor

Comments

[Gold IRA]

I liked silver over gold; there was ten times as much silver above ground as there was gold. Despite that, we made two or three times as much money on silver as we did on gold.
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Hi
It is not so that silver is loosing in the market. Actually its in a fluctuation situation. Silver is not bad metal to invest.

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