Gold News

$25 Silver Sees SLV ETF Shrink to 3-Year Low, Gold Price Jumps

GOLD PRICES leapt into Tuesday afternoon's benchmarking auction in London's physical bullion market, catching up with silver's recent out-sized gains as the more industrially-useful precious metal saw the giant SLV investment ETF shrink to its smallest size since May 2020.
The Dollar gold price jumped $25 this afternoon from Monday's LBMA benchmark, reaching $1975 per Troy ounce – the highest since the start of June – and then climbing towards 2-month highs above $1980 after new US data said retail sales in the world's largest economy grew less than analysts forecast in June but continued to expand.
That boosted bets that the Federal Reserve will both avoid causing a recession and also pause its interest-rate hikes after next week's widely-expected rise to 5.5%, the highest cost of borrowing since 2001.
Silver prices meantime held little changed today, ticking up 8 cents above $25 – and gaining $2 per Troy ounce from this point last week – to pull the Gold/Silver Ratio of the 2 precious metals' relative prices back up after last week's sharp drop, made as silver leapt the fastest in 3 years to near 2-month highs.
The giant iShares Silver Trust (NYSEArca: SLV) – the world's largest silver-bullion backed ETF – has now shrunk by 1.9% since last Tuesday, the day before US cost-of-living data said inflation is slowing, reducing the need for further Fed rate hikes.
Chart of the SLV silver ETF backing in tonnes vs. the Dollar silver price. Source: BullionVault
With shareholders liquidating SLV stock for 4 sessions running since that inflation news, the No.1 silver ETF ended Monday night at its smallest size in almost 38 months, down by one-third from the record #silversqueeze peak of early 2021.
Giant gold ETFs the GLD and IAU have also seen net outflows of investor money over the last week, albeit more muted than outflows from the SLV, ending Monday at the smallest in 3 weeks and 2 months respectively.
"The Gold/Silver ratio plummeting from 84 to almost 78 in a week, [plus] the relative gold and silver performance in Euro terms (to weed as the massive effect of the Dollar move), indicates there is real and 'silver-specific' buying, while gold [had] been pushed around [more] by the currency move," says a note from Swiss bullion refiners and finance group MKS Pamp.
Tuesday afternoon's jump in gold prices pulled the ratio of gold to silver prices back up to 79 after touching the lowest so far this year in spot bullion-market trade at the end of last week.
Both the UK gold price and the price of gold in Euros meanwhile jumped together with the Dollar price this afternoon, reaching 2-week highs at £1515 and €1765 respectively.
Silver's steep price jump wasn't likely due to speculative short-covering in the Comex futures and options market, according to data collated and published by US regulators the CFTC, because betting against silver among 'Managed Money' traders had grown only to a 4-week high by last Tuesday, eve of the softer US inflation data, and remained 5% below that category's median short position of the last 3 years.
Speculative outright short positions on the Comex derivatives exchange against gold prices had reached a 17-week high, in contrast, but were 23% smaller than the 3-year average.
Gold last year found less than 10% of its end-demand from technology or other 'productive' uses, in contrast to more than 50% silver, for which silver in photo-voltaic solar power installations is becoming an ever-larger source of demand.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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