How is this possible? For a metal like palladium, demand is pulling it away from investment form and into the physical markets, into catalytic converters in cars basically. Paper palladium holdings have been falling sharply for 6 years and the price of palladium keeps hitting new highs. ![]() If interest in paper gold and silver vehicles is falling, is this bearish for the price of both metals? The short answer is no, and this next chart below proves it. Paper gold holdings as an asset class are falling as gold's price has been rising for a month now as you can see in the next chart. Here's what's been happening with total silver holdings since silver bottomed in late March. It's all paper silver holdings as an investment class with the notable exception of the Sprott Physical Silver Trust ( PSLV), which has increased its holdings by about 40 million ounces since February. ![]() SLV, as a vehicle for tracking the price of silver, is apparently losing its appeal.Īnd it's not just SLV. That means share baskets are being redeemed out of the ETF in order to keep slacking demand for SLV from pushing the price of SLV shares too far out of line with the spot price of silver. Since silver bottomed at the end of March, the metal has risen about 9%, and still SLV holdings have continued to fall. And in March last year, demand for SLV rocketed higher and SLV holdings went to new records, and to yet new highs again during the initial phase of SilverSqueeze.īut look at the chart below and we can see the opposite happening now. For 9 years from 2011 to March 2020, SLV holdings had stayed remarkably steady overall even as the price of silver fell from just under $50 to $10.80. Above, we can see that SLV holdings have tended to move higher with the silver price, but they have never fallen significantly even when silver sells off, as in 20. We know this by comparing the chart above with the one below. Since then, though, SLV demand has completely reversed itself. The fact that a record number of baskets were issued and silver deposited during SilverSqueeze shows record demand for SLV paper silver at the time. If demand for SLV exceeds the spot price of silver, new baskets are issued and the supply of SLV shares increased to keep the price in line with its Comex benchmark. How SLV works is that it tracks the Comex silver futures price by adding and subtracting share baskets in exchange for physical silver. ![]() The flows were so extreme that SLV even amended its prospectus at the time to reflect the possibility that it may be forced to stop issuing share baskets in the event that it ran out of silver to source. SLV saw record silver inflows of over 50 million ounces in a single day. When futures markets opened the following Sunday night/Monday, the paper markets followed physical demand higher. Bullion coin shops were raided to the point that many of them had to shut down for lack of ability to hedge their inventories. The move to buy the metal actually began over the weekend on January 30 while paper markets were closed. I called it the shot heard round the world fired with a silver bullet. What happened in February that marked a sea change for silver investment from SLV to physical? Februis now known as SilverSqueeze, when retail silver investors first banded together through social media to buy silver at the same time. It still is the largest component of total paper claims on silver, but, since February, it appears to be losing its appeal in favor of physical silver coins. Photo by Chris Nimmo/iStock via Getty Imagesįor over 15 years, the iShares Silver Trust ( NYSEARCA: SLV) has been the "silver standard" of paper silver investment. I do much more than just articles at The End Game Investor: Members get access to model portfolios, regular updates, a chat room, and more.May 1 is also the anniversary of gold confiscation back in 1933. Craig Hemke at SprottMoney is calling for SilverSqueeze2 on May 1 to coincide with May silver futures deliveries.The stresses on the physical silver markets are apparent in the persistently high coin premiums and a drain of over 37 million ounces from the Comex since the February SilverSqueeze.This is not bearish for silver at all, see palladium for example, paper holdings of which have been in freefall for 6 years but palladium keeps making new highs. ![]() Demand appears to be focused on the physical silver markets as total silver holdings across all paper silver holdings have been falling since March. Not anymore, with SLV holdings falling fast as the price of silver rises. Since its founding in 2006 until February, SLV has been the most popular method for silver investment.
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