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Highest Silver Prices in Twenty Years Attributed to New Exchange Traded Fund

August 30, 2010 by  
Filed under Silver Investment Basics

Exchange Traded Funds have broken the barrier of yet another sector. The move of Exchange Traded Funds into the commodities sector continued after the Securities and Exchange Commission approved rule changes that would allow Barclay’s iShares Silver Trust, to begin trading on the American Stock Exchange.

This gives investors yet more choices in the ETF marketplace. The iShares Silver Trust will be backed by silver held in London vaults. It will be modeled after the StreetTracks Gold Trust ETF. This is expected to soak up much of the available supply of silver, which will increase demand and drive up prices.

This has temporarily affected the gold market. Some investors are now selling gold and buying silver in anticipation of a price run up in silver. This market is very volatile as it has always been. The SEC does not think this new fund will put a squeeze on the supply of silver. Others have a different opinion.

This latest ETF is aimed to satisfy the investors desire for commodity related Exchange traded Funds. The earliest Exchange Traded Funds were closer to index Mutual Funds. The main investors then were institutional. In recent years the number and range of ETFs has exploded. No longer do they reflect just major indexes such as the Dow, Nasdaq, S&P 500 and Russell 2000. There are all kinds of Exchange Traded Funds, following sectors that equities indexes are not designed for. Now there are more commodity related ETFs coming on board.

This is no mystery. The price of Silver skyrocketed 30% in 2005 while the S & P 500 gained just 3%. In the near future the prognosis for US based stocks will not change much. That leaves investors to search for other areas of investments. In the near future those investments that are likely to provide the greatest return are commodities.

The world of Exchange Traded Funds is changing quickly. Keep on top of all the developments at

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