A New Exchange Traded Fund May Have a Major Impact on Long Term Silver Prices

Last week, after much publicity and a long wait, the Barclay's Silver ETF (SLV) finally started trading. And it looks like the wait was worth it. Each share represents 10 ounces of silver. Trading began at $ 129 per share, at the end of trading for the first day, a new exchange traded fund closed at $ 138.12 after trading more than 2 million shares to him on the first day of trading.

This new fund appears to be hugely popular with traders. This is one of the new exchange traded funds, which acts more as a commodity, then the stock. Exchange traded funds that ten years ago were very conservative and were mostly mirrors of major stock indexes, and are now getting very creative in the sectors present in the underlying financial instrument they represent. You can, but now ETF that invests in gold, silver or oil. When capital markets look foolish, investors can now move their money into funds that are driven by commodities. Although not as volatile as the futures market and the funds can still have wide price swings.

Silver and Gold was recently trading over a decade highs. With the start of the inflation increase and volatility in global energy markets, metals, and could continue to rise in value. Another factor, especially in driving the price of silver has the approval of Barclay's new silver fund. The Fund is backed by physical silver, and trade in the fund created by the demand for physical silver. This will probably continue to drive the price of silver up.

As the second day of trading ended with 1.5 million shares traded and silver continue to move up a bit, there was speculation about how long this trend will last. Silver, however, do not run from day to day news, as well as many shares. It is driven by long-term trends. This trend began with the introduction of the gold standard and the end use of silver as money. With the introduction of the Silver ETF, the long-term trend is reversing. Silver is now for the first time in years, having saved a fortune again.

Another trend is the use of silver as an industrial metal. With the industrialization of India and China, using silver as an industrial metal grows. There is now a contest of physical silver for use as an industrial metal and storage of physical silver for investment. It seems that the beginning of a long-term trend that will keep the pressure on silver prices to move up.