HOUSTON (ResourceInvestor.com) -- As silver traded sideways for the entire month of August, Barclay's iShares Silver Trust [AMEX:SLV], a silver metal exchange traded fund, has quietly been adding sliver metal to its holdings. On August 30 the ETF passed a significant milestone in its short four-month existence by eclipsing 100 million ounces of the white metal acquired and held, 100,368,644 ounces to be precise. Positive money flow into the highly liquid metal investment vehicle continues in a stealthy sort of way.
On July 31, the trust reported silver holdings amounting to 2,874.5 tonnes of silver bars held by a custodian in London for SLV investors. By August 30 metal holdings had increased by 247.3 to 3,121.8 tonnes, an addition of 8.6%. Meanwhile, silver metal for immediate delivery more or less traded sideways, confined to a $1 range of roughly $11.70 to 12.69 for the period, closing Wednesday in New York at $12.51. SLV (the ETF) showed a last trade Wednesday of $125.11.
The trust is a continuous offering exchange traded fund designed to track closely with the price of silver. Each share of SLV approximates 10 ounces of silver metal. The amount of metal holdings and the number of shares of the trust fluctuate according to the price of, and demand for the shares relative to the price of silver. The trading vehicle only invests in silver metal and does not use futures, options or derivatives.
Each metric tonne contains about 32,150.75 ounces or roughly 32 average 1,000 ounce good-delivery bars. 3,121.8 tonnes, worth $1.226 billion Wednesday, represents about 100,369 of the heavy pure (minimum .999 fine) silver blocks.
Stealth Buying
From July 31 through yesterday, 30 days, SLV has added new silver at a pace of 8.2 tonnes or roughly 265 good delivery bars of silver per calendar day. That indicates continued positive money flow for the trust. Positive money flow occurs when there is significantly more buying of SLV shares than selling, (more wealth entering than leaving), resulting in an increase in the number of trading shares along with a corresponding increase in metal holdings. Negative money flow results in the opposite.
While silver traded in a tight trading range during the usually light August liquidity period, there has obviously been considerably more buying of the silver ETF than selling. Arguably that indicates a significant collective appetite by market participants large and small for the second most popular precious metal at current levels.
The above contains opinion and commentary of the author. Each person should study the issues carefully and, as always make their own informed decisions. Disclosure: The author currently holds a long position in iShares Silver Trust.
