Modest Inventory Declines at SLV

by: Tim Iacono November 21, 2008 | about stocks: SLV    

Tim Iacono

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Since the inventory/price charts for the iShares Silver Trust (SLV) haven't been updated in a while, now seemed like a perfectly good time to do so. As shown below (click to enlarge), there's been a net inventory decline of about 200 tonnes over the last month.IMAGEThis follows a net addition of more than 1,500 tonnes since March when the silver price peaked at over $20 an ounce.

For the year, about 2,000 tonnes have been added, an increase of about 42 percent, as the price has fallen by almost the same amount.

This is shown clearly below (click to enlarge), the expected relationship between price and inventory (i.e., the two generally moving together) ending abruptly after the March high.
IMAGELooked at it another way as shown in the chart below (click to enlarge), the inventory-to-price ratio is down slightly from an all-time high of 770 in late-October, just before the first of the three most recent inventory reductions occurred.
IMAGEAs is the case for "paper" prices versus "physical" prices for silver bullion, a dramatic change occurred in July as indicated in the slope of the green curve above. Forced sales by hedge funds and other sales on futures markets have pushed the price of the metal down but owners of SLV shares have been buyers, not sellers, during this entire period.

Recall that next Friday, November 28th, is first notice day for December deliveries on the Comex, an event that could produce some interesting results.

In years past, the day after Thanksgiving has been a rather exciting one in metals markets due to exceptionally light volume on U.S. exchanges.

This year will likely not be any different.

Full Disclosure: Long SLV at time of writing.

Related Articles

This article has 2 comments:

  •  
    Nov 21 11:41 AM
    Hurry on into silver in some form. We don't have much downside, but the upside will be a real treat. I'm long SLV and hold physical silver and stocks. The push is on to get the COMEX to reflect some reality. If that doesn't happen, the COMEX will lose its long side traders who will trade from a different bourse.

    The U.S. had a stake in being honest, but refused to fairly enforce regulation. Too bad for this country because people don't like to play with bullies and liars.
    Reply | Link to Comment
  •  
    Nov 21 11:42 AM
    Tim, Love your articles, period!

    Tim, where do you think silver price will be by mid-December?

    I am a hoarder of gold and silver bullion since 2002, with ZERO paper of each! I learned my lesson, losing my 6-figure retirement in 2000-2001 debacle.
    Reply | Link to Comment
More Comments on SLV »
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by Tim Iacono

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Long Ideas
Commodity ETFs
Silver
Asset Allocation with ETFs