Bid to block silver ETF should fail - analysts

30 March 2006 19:44  [Source: ICIS news]

TORONTO (ICIS news)--Efforts by industrial silver users, including major US chemical companies, to block an exchange traded fund (ETF) investment product for silver are not likely to succeed, analysts said this week.

 

DuPont, Dow, Engelhard, Ferro, along with other firms, are part of Fairfax, Virginia-based Silver Users Association (SUA) which is working to block a silver-backed ETF product proposed by Barclays Global Investors. The ETF would see silver traded on the American Stock Exchange, allowing investors to cheaply and quickly invest in the silver market, similar to investments in the many listed share, bond, index and other ETF products available on the market.

 

The chemicals companies and other users fear that silver-backed ETFs would push already high silver prices even higher. The SUA argues that such ETFs would lead to the removal of large quantities of silver from the market to be held in vaults, making the market illiquid and leading to job losses in silver-related sectors, according to SUA executive director Paul Miller.

 

Analysts at Toronto-based investment firm TD Newcrest said silver ETFs will be “beneficial to the market place” in that they will help industrial silver users to better manage risks while giving investors low-cost, direct access to invest in silver. The analysts believe US securities regulators will approve the ETF, and they expect there will soon be platinum, palladium and other precious metals-backed ETFs as well.

By: Stefan Baumgarten
+1 713 525 2653

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