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January 30, 2006

Silver ETF on the way, Mon., Jan. 30, 2006, 7:15 AM

The iShares ETF that will hold silver bullion is expected to start trading in two weeks, under the ticker symbol SLV. Not everybody is happy.

A non-profit lobby group called the Silver Users Association opposes SLV, saying that the ETF is setting off a pre-launch price spike, and will create price spikes in future based on speculation by traders who are not interested in taking delivery of the physicals.

But is that not precisely why we need SLV, and why we need ETF's for all commodities including the rest of the precious and base metals?

As for me, the day we can trade in pure commodity securities cannot come fast enough.

I'll even go a step further; I'd like to see commercial banks offer gold certificate bank accounts in addition to the traditional cash accounts. Why should the owners of capital be forced to put their trust in a nation's currency?

Posted by Posted by Bill Cara on January 30, 2006 07:15:44 AM | Category: Bullion

Discourse

More are coming ;-)

Posted by: g034 [TypeKey Profile Page] at January 30, 2006 8:16 AM [link]

Bill - I too eagerly await the availability of SLV and look forward to trading it.

On the other hand, I'm not so sure that I want more public speculation moving into ALL the commodities. For example, what would happen to families everywhere if someone introduced a Wheat ETF and it then moved up similarly to that for GLD? Commercials would have to pass the price increases on to the working class.

What about the poor? Well, we know that the Gov would give them bread - the circus (Congress) is already provided. --ng.

Posted by: spot [TypeKey Profile Page] at January 30, 2006 8:22 AM [link]

Bill,
I did a little research into this over the weekend. As you know, the SEC has proposed a rule that would allow the silver ETF to trade. That rule is now in the "notice and comment" period under USA's Administrative Procedure Act. I expected to find a well-organized negative comment campaign by the Silver Users Association. What I found was the exact opposite:
http://www.sec.gov/rules/sro/amex/amex2005072.shtml
Commenters to date have shown overwhelming support for the rule (and the ETF). While it is not a popularity contest, many of the comments address and debunk the arguments expected from the SUA. Take a look.

Posted by: josh [TypeKey Profile Page] at January 30, 2006 9:19 AM [link]

FREE MARKETS FOR FREE MEN!

Posted by: g034 [TypeKey Profile Page] at January 30, 2006 11:27 AM [link]

I think there is a big difference between goods you can store indefinitely and ones you can't. I don't think a wheat ETF would make sense because you can't hold wheat forever. With gold and silver, if they are sitting in a vault somewhere for years, they are still usable when they are put back on the market...

Posted by: korvus [TypeKey Profile Page] at January 30, 2006 12:21 PM [link]

Bill,
There's a commodity ETF set to IPO this Friday. The symbol is DBC. It's based off the Deutsche Bank Commodity index. The commodities that make up the index are: WTI (crude) 35%, Heating Oil 20%, Aluminium 12.5%, Gold 10%, Wheat 11.25%, and Corn 11.25%. Plans for single commodity ETF's are still on the drawing board. Demand of this ETF will go a long way to determine if those plans are actioned. Personally I would have used copper in place of aluminium, and the gold allocation would have been higher at the expense of crude. But what the heck do I know.

Posted by: jpatrick [TypeKey Profile Page] at January 30, 2006 6:06 PM [link]