Tuesday, March 21, 2006

SEC approves rule changes for Silver EFT

Silver broke through a 22 year peak today as the Securities and Exchange Commission approved rule changes for a Silver EFT. Expect to see higher prices in the metal yet.

NY silver ends at 22-year high after ETF ruling

NEW YORK, March 21 (Reuters) - U.S. benchmark silver futures scaled a 22-year peak on Tuesday on brisk speculative buying after U.S. regulators supported rule changes for the first silver-linked exchange-traded security.

The Securities and Exchange Commission said it has approved rule changes that will allow the American Stock Exchange to list shares in Barclays Plc's (BARC.L: Quote, Profile, Research) iShares Silver Trust, which is designed to track the price of the metal. [nN21216480]
Before the Silver Trust shares can begin trading, however, the SEC would have to sign off on a registration statement allowing the shares to be publicly issued.

"The registration statement has not yet been declared effective," said SEC spokesman John Heine.

Silver for May delivery at the COMEX division of the New York Mercantile Exchange closed at $10.5650 per ounce, up 20.3 cents, or 2 percent, on the day. Tuesday's high of $10.58 was the priciest level for futures since October 1983.

George Gero, vice president at RBC Capital Markets Global Futures, said heavy buying in silver was sparked by trader bullishness about the Silver Trust probably receiving final U.S. regulatory approval in the near future.

"It seems like the SEC is favorable toward the Barclays silver ETF (exchange-traded fund) and they are moving ahead, and that I think was the major help to prices," he said.

The silver ETF would be backed by silver bullion held in vaults in London, with each share worth about 10 ounces of silver.

Leading ETF provider Barclays Global Investors proposed the security last year. Shares would be issued in baskets of 50,000 shares or multiples thereof and would be traded on the Amex like other securities, as is Barclays' iShares COMEX GOLD Trust.

The sponsor fee for the shares is set at 0.5 percent of the net assets of the trust, the SEC said.
John Reade, analyst with investment bank UBS, said silver prices may go higher if the ETF winds up triggering both substantial spot purchases and investor buying on fears of potentially decreasing liquidity in the global market.

"Silver has hit our one-month target of $10.50/oz but we believe that it can trade towards our three-month target of $11/oz very quickly.


Out at the peak said...

This is very exciting for silver investors. My SLW pick went from $6 to almost $10 now. My one ounce coins will be tucked away for awhile.

Speedmaster said...

Nice post. I'm also looking to an ETF for silver and copper.