Not enough silver for the SLV ETF?

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Not enough silver for the SLV ETF?

Tuesday, September 22nd, 2009 | Economics |

The Comex Delivery Report showed that 6 gold and 23 silver contracts were delivered yesterday. I see that the GLD ETF showed a big jump yesterday… up a fairly substantial 490,487 ounces… 15.3 tonnes. The SLV ETF, which is owed around 30 million ounces, showed no changes once again. Nothing has been added to the SLV since September 3rd… while 763,000 ounces of gold have been added to the GLD. If you think something stinks here, you would be right about that.

Over at the Zürcher Kantonalbank in Switzerland, they reported their activity as of the end of the business week last Friday. They showed that their gold ETF took in another 23,952 ounces, while their silver ETF added another 198,212 ounces. I thank Carl Loeb for those numbers. Except for one week, ZKB has added silver to their ETF every single week for the last four months! And, if my record keeping is accurate, the silver ETF… SLV… has had only six changes in inventory level in the last three months; three up days and three down down. At the beginning of that three month period, the SLV ETF had 280.5 million ounces. As of yesterday it had 280.6 million ounces. Something does not compute here… probably to the tune of 30 million ounces!

Ted Butler had concerns about SLV last year.

Gene Arensberg isn’t worried, at least not for the same reasons:

Silver ETF critics usually have an agenda, such as a competing product or a naturally suspicious bent toward bullion banks. But the largest silver ETF has invited a heightened level of blog-whipping lately for one important reason. As we reported earlier in April, SLV has already exceeded the amount of silver foreseen in its custodian agreement with JP Morgan Chase, London, (the agreement called for up to 270,484.574.5 ounces, SLV already holds 280,553,742.3 ounces and has held slightly more in the recent past with the same custodian). The trust as yet has not announced a new custodian or sub-custodian agreement (or the amount of potential silver which might be available under it). So that fact alone leads to some speculation that available metal is scarce. However, as we also reported then, Barclays said that its custodian had agreed to continue share creation support for the time being, (pending the sale of iShares), which will allow SLV to operate normally.

I like ETFs for getting exposure to metals inside my 401K retirement fund, but things like this concern me. I have some SLV in my retirement account. It looks like I need to diversify into other silver funds. I split the gold holdings in my 401K between three funds - GLD, CEF, and GTU - and I wouldn’t mind diversifying that a bit. There’s a new Swiss gold ETF (SGOL) that holds 1/10 ounce of gold for each share issued.

Last week gold opened and closed above $1,000. Today gold closed above $1,015. Good times.

Tags: etfs, gold, silver