Will Silver ETFs Be Hit by Commodity Regulations?
Source: Seeking Alpha, Tom Lydon (8/27/09)
"The fear is that commodity ETFs lead to excessive buying that artificially inflates prices."
The idea that industrial demand will pick up as the economy recovers has taken silver spot prices to a high of $14.45 an ounce. Gold, on the other hand, has seen a 6% increase in prices, which pales in comparison to silver's 26%, explains Melissa Pistilli for Silver Investing News.
The latest U.S. ETF that focuses on silver launched last month from ETF Securities, ETFS Silver Trust (SIVR). This tool gives cost-effective and transparent exposure to the physical metal, without any physical delivery. The SIVR has already hit the $100 million assets mark in only its first month of trading on the NYSE.
ETF Securities is looking at markets in Hong Kong and Singapore for fund listings within the next year and a half. The reaction to the latest Commodity Futures Trading Commission (CFTC) regulations has managers making major changes to their listings.
This year, an investigation into rising wheat prices in 2008 drew the attention of Congress to commodity ETFs. The fear is that commodity ETFs lead to excessive buying that artificially inflates prices. The CFTC is looking at a number of possibilities as to why speculation may be an issue within the commodity markets.