A Reason To Be Bullish On The Silver ETF (SLV)

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June 19, 2009 11:12am ETF BASIC NEWS NYSE:GLD

silver-barsSilver has been lagging the price ratio between gold, making silver an attractive investment.  “For nearly 5,000 years, the price ratio between gold and silver has averaged approximately 15:1.

This number is very close to the 17:1 ratio which represents the natural occurrence of the two elements in the Earth’s crust. It is interesting to note, however, that through most of history the price ratio has favored silver,” Reports Jeff Nielson from Bullion Bulls.

Nielson goes on to explain how large the gap has become “In the last century, that ratio has rapidly, if unevenly risen. As of this moment, the gold:silver price ratio is once again nearing 70:1. Given the historical data, the natural assumption to make is that the world must be practically overflowing with silver for the price ratio to have gotten this skewed. In fact, this couldn’t be further from the truth.”

Something to consider is that silver is the most practical metal being used in the industry.  “Silver is not simply a much more versatile metal than gold, it is the most versatile of all metals. In recent years, there have been more new patents issued for products containing or using silver than with any other metal. Because of this amazing versatility, most of the so-called market “experts” (especially in North America) have branded silver an “industrial” metal,” Says Nielson.


This bullish case proves well for an investment in the silver ETF’s.   The objective of the investment (ETF -SLV) 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.


As we published before, “Claymore Filed A Prospectus For Silver Bullion ETF”    This new Silver fund will be similar to the SPDR Gold Shares Trust (GLD), which it will hold a stake in the physical metal.  This new fund will provide a great alternative to iShares Silver Trust (SLV) which does not provide the exact equivalent of an investment in silver.


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