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Silver Wheaton Corp. Message Board

  • chemaes44 chemaes44 Nov 18, 2008 11:17 AM Flag

    New silver ETF

    As a long time investor in silver (4 to 5 yrs) I was excited when news of the first silver etf broke and i fantasized about the silver ETF hitting 100 million ounces. During the launch of the ETF I made a quick 400-500% on some warrants I held in SLW and other miners. I fantasized how the etf would drive the silver price up to $30-$50 dollars.

    Why? Because in reading the Hunt story of 1979, they had amassed 155 million ounces, physically held by them, and they had another 90 million in futures contracts for delivery a few months out (total 245 million). I theorized that if indeed world inventories of silver had fallen over the last 30 years and that the production deficit number had worsened, then the only outcome would be silver much higher.

    I have to admit that I watch in wonder today that the total holdings of the barclay silver etf is 216 million of arguably held silver and that the central fund of canada has 49 million ounces for a total of 264 million, that the silver prices today languish under the prices of the HUNTS first big purchase 30 years ago at $10.

    When you also combine this information with the mass retail purchase of silver, that is probably exponentially larger than what was bought by retail investors 30 years ago, I would theorize that at least another 50 million ounces worldwide has been bought.

    So here we are today with possibly 314 million ounces of silver held for investment, and another ETF about to be launced in the middle east (by the way it was iranians and saudis who helped the hunts purchase silver the last time around), and the production deficit and world inventtories worse than 30 years ago, and, silver prices are still lower than 30 years ago. You just have to laugh, there really is nothing else you can do.

    good trading

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    • Has anyone given a single thought to the fact that maybe just maybe they just don't want to have deal with the US market?(or any market for that matter). Maybe they just want something closer to home that can't or won't be shut down for a fortnight when things here get really bad here? A place that is not hostile to muslims and oil sheiks with solid silver and solid gold cars??? Have you given a thought that maybe all these people who go to Dubai for vacation to and buy gold and silver for poops and smiles don't want to fear any more US retributions??? We are on the verge of something horrendously bad and all we can think about is "ALL YOUR BASE ARE BELONG TO US"

      As Slim Pickens said at the end of Dr. Strangelove..."YEEEEEHAAAAAWWWWWWW!"

      • 1 Reply to ggrant1000
      • I don't care if they want to their own ETF because they screw their mamas, the fact is, the great sucking sound for your dollars or drachmas or Spanish escoudas that would have gone into real miners or bankers for miners like SLW is ANOTHER source for Mohammedsixpac to dump his fiat instead of US, whether that be US or U.S. or Canada.

        Think what would happen to the value of your SLW shares if every country had its own silver ETF including us. You'd have $11.42 left over to invest in SLW shares.

        Jeez this is rediculous.

    • The reason you cry, instead of laughing, is just as the world has decided to lower the price of silver due to redemptions to cover diversified (confused) shotgun portfolios designed by stock market mavens that can't find their butts with both hands, and the DEMAND side of silver MINING STOCKS and SILVEER SPECIE at spot levels takes a hike, whileJoesixpac will pay anything at retail for the metal--here comes another ETF to siphon money away from real specie, and real miners, and real mining bank investors like SLW, by diluting the entire sector.

      Somebody just touted, the presence of the ETF as "attention" to the sector, might as well be an abused child waiting for attention via the next crap of the whip.

      Let me see if I can be clearer, this doesn't have anything to do with the demand for silver, other than the demand for the STOCKS just got another player on the board.

      If you get a ten minute "pop" from this attention, I am all for it, but eventually think this way: what if they made 10 ETF's each country for specie?

      How many real silver investors, will actually believe moving their money into these ghosts actually make a difference to the price of the metal, and the companies that mine or broker it for real?

      There's only so much money, and if everybody is in an ETF that tracks, but doesn't own real specie or real mining stocks or real mining bank/brokerage stocks, you have a lessoning of DEMAND in the wake of increased paper stock ETF SUPPLY.

      Think of yourself as a Christian in the lion den, and they've let more lions loose. The crowd cheers, and even though you're dinner, you catch the fever and begin cheering as lions congregate around YOU.

      That's what welcoming this dilutive event really means to stock prices, and that is all I care about.

      • 2 Replies to yourdeadmeat69
      • I should think the Arab ETF would hold real silver and have it located THERE...

      • deadmeat, I welcome the discussion because I did think about this very thought a few years ago during the first etf launch.

        When I started this thread, i did so out of frustration after seeing "demand" increase in the "supply - demand +/-stockpiles=surplus or deficit" equation, but not seeing the price of silver increase.

        Although educated as an engineer and doing a host of things through my career, my specialty during the last 8 years, that I did work, was in something I would describe as " supply chain logistics artificial intelligence" but also simultaneous doing analysis of fortune 500 companies.

        I think you argue that another ETF represents more competition for money that might otherwise go to miners like SLW. Therefore, where is the benefit?

        A demand is a demand. But also, a supply is a supply. And, a investment instrument is an investment instrument. However, there are overlaps. Whereas miners represent supply and an invesment instrument, etf's on the other hand represent demand and an investment instrument. This is an important distinction in the equation.

        whether it is a few dozen new ETF's, more numistatic dealers opening, retailers in india... these all in their simplist essence boil down to more demand in the equation that I mentioned. When the equation skews more to a deficit the market will adjust the prices to the upside. The only argument to this is that in todays times with world recession some of the demand side in the equation is lost due to industrial slowdown and this is not an insignificant amount but that does not take away from the fact that the rolling average of material removed from the system over the years still results in completed demand.

        I do agree that in the pool of INSTRUMENTS (miners, etfs, numismatic dealers, mutual funds) existing for silver, the more of them that exist, the less money for any one individual exists. But, lets not mix apples and oranges. ETF are demand and investment vehicles, while miners are supply and investment vehicles.

        I have always invisioned two types of money coming into the mining sector. Smart money and money just looking for a initial gain. Money just looking for a gain will go to etf's, coins (demand and investment), etc first but there is no mistaking that when the silver prices move to a higher place, the leverage and returns provided by etf's and coins will pale in comparison. In a world where money leverage has dissappeared, those that did money leveraging will seek to replace this practice with anything similar. Miners profits (supply and investment) offer leverage to the silver price period. An etf gain may be 1:1 with the silver price increase but when silver gains, the miners gain will be much greater than 1.

        So yes, intially money will go into the simple instruments like ETF's but with any sustained price move in silver, the funds, institutions and likewise will come flooding into the leveraged mining plays.

        It is no different than some folks choosing the gains of options over the gains of the simple underlying. One of the reasons you invest in options, which you are an expert in, is because of the leveraged returns.

        Good trading

    • Yes... invest right here right now...SLV.. HL..SLW..PAAS..MAG..Silver Standard... the only reason people are not interested is because of the Bull mentality which was mindset in 2000 but not broken. After the highs of the internet bubble investors were still left with a bullish mentality, and for good reason. Even when things are in the dumpster investors are looking for short term gains. Right now, short term gains are very hard to find. But you could park your money in silver and catch an easy 100% in 12 months. Just need to buy in at the lows and wait it out. Sounds easy doesn't it?

    • I hate to be the bearer of sad tidings, but another drain on the world's penchant to invest in the ghost of money, namely silver ETF DRAINS demand for some kind of silver representation in some kind of portfolios. Certainly some silver is going to be needed to back up the new ETF, but the leveraged numbers of shares of this ersatz ghost of silver, will drain investor interest and cash from real mine or mine related investment banks like SLW.

      Think of it as dilutive the entire silver sector, and I can't see why you are all jumping for joy.

      Thrill me with your answers.

    • Excellent news! Thanks for the post.


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