We kick off with a quick look at the ‘weekly’ chart of iShares Silver Trust (SLV) which shows the sudden jump in the volume of shares traded last week largely attributable to the surprise changes to the rules governing the use of margin, which were introduced with immediate effect, causing investors to scramble to meet higher margin requirements.

Also note that the RSI is in the overbought zone at 73.71, the MACD and the STO are also well above their mean averages suggesting that we could be in for a short period of consolidation. Silver prices may suffer early next week for a day or so and we could silver trade down to the $25.00/oz level with a subsequent knock on effect on SLV. Although it remains to be seen as where silver prices will go we do expect some stabilization prior to another major up leg.

The objective of this investment trust is to reflect the price of silver owned by the trust less the trust’s expenses and liabilities. The fund is intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver. Although the fund is not the exact equivalent of an investment in silver, they provide investors with an alternative that allows a level of participation in the silver market through the securities market. And as we can see there is ample liquidity for those who have a need to transfer in and out of the silver space quickly. This trust has gained in popularity since its inception with investors pouring millions of their dollars into it and according to Google Finance it is now worth a staggering $7.67 billion.

Holding paper as in the form of shares is not the same as owning physical silver and having it in your own hands where it cannot be subjected to lease agreements or counter party risks. And for disclosure purposes we do not own any shares in SLV, however, it does have its uses as a vehicle for options trading which we make use of from time to time.

This Trust has a market capitalization of $7.67 billion, with 300.40 million shares outstanding, a 52 week trading range of $14.37 to $28.72 with an average volume of 27-57 million shares traded, although last week saw trading exceed 300 million shares.

Shares Silver Trust (SLV) trades on the New York Stock Exchange under the symbol of SLV.

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Bob Kirtley Archive

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