Silver ETFs Experience Record Trading Volumes as Prices Slip


"Many investors are shedding their holdings in this volatile precious metals market."

Resource Investing News, David van der Linde

Silver prices plunged from a high of $48.20 U.S. an ounce on April 28 to about $34 today, as many investors shedding their holdings in this volatile precious metals market. ETF Securities U.S.A says that it traded a record 5.25 million shares of ETFS Silver Trust (SIVR) on May 5th, 2011, with a value of $740 million traded over the week as many investors sold off their holdings in the Silver ETFs.

"SIVR trades like a stock because itís listed on the stock exchange, so in that period of time you can sell SIVR, providing that the New York stock exchange is open," said William Rhind, Head of Sales & Marketing at ETFS Marketing. "Thatís very different than physical silver where you just donít have that same liquidity. You canít get out when you want to like with SIVR."

ETF Securities says that the average daily volume in SIVR increased 18.5 times from $8 million U.S. to $148 million U.S. in the midst of high volatility in the silver market. SIVR began trading on the NYSE ARCA on July 24th, 2009 and has since established itself in the physically backed product landscape offering exposure to silver.

"I think it means thereís broader acceptance of SIVR as a vehicle to access the silver market," said Rhind. "I think that since 2009 weíve noticed a gradual buildup of volume and usage of the product, which clearly grew to a crescendo in that particular week."

Rhind says that since the more than $10 U.S. drop in the silver, he is now seeing investors buying back into SIVR, wanting to re-establish their holdings in the metal.

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