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Silver ETF holdings set record high as price drop sparks interest

Monday, September 15th

Holdings at the world's largest silver-backed exchange-traded funds (ETFs) rose to a record high as a pullback in prices prompted long-term retail investors to increase purchases of the precious metal.

The tonnage of silver bullion held by the world's six largest silver ETFs increased by 104 tonnes, or 0.6 percent, to a record 17,135.04 tonnes on Friday, the latest Reuters data shows.

The jump was driven by a 1-percent rise in the holdings at U.S.-based iShares Silver Trust, which accounted for more than 60 percent of the physical metal in global silver ETFs. The ETF also posted its biggest one-day inflow since May 1.

Long-term silver retail buyers stepped up demand after silver broke below the key $19 level last week, dealers said. On Monday, silver edged up 0.1 percent to around $18.58 an ounce, hovering less than 50 cents above a four-year low at $18.19 an ounce set in June 2013.

"I expect ETFs in silver to outperform those in gold as small silver speculators continue to come onboard," said Bill O'Neill, a partner at commodities investment firm LOGIC Advisors in New Jersey. "But I don't think that's going to be a driving force for the market."

"However, if you see a significant increase in gold ETF holdings, that would be very bullish and it would signal the market has bottomed and it's going to turn higher," he said.

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