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Wednesday, December 27, 2006

Money Is Pouring Into Silver and Gold ETFs

There was a very interesting story over at Resource Investor the day before Christmas -- it's easy to miss this kind of stuff around the holidays, so I'm going to reproduce some of the "Got Gold" report here...

While silver metal on the cash market was mistreated over the past two weeks and plunged as much as $1.89 the ounce, metal holdings for Barclays’ iShares Silver Trust [AMEX:SLV], the U.S. silver ETF, skyrocketed by a stunning 325.5 tonnes to total 3,768.02 tonnes (121,144,585 ounces) worth $1.51 billion as of Friday’s figures. And get this; 279.02 tonnes of that titanic increase in silver holdings occurred on Thursday, December 21. Talk about positive money flow!

To put this eye-opening liquidity-induced silver positive money flow event into context, consider that the 279 tonnes of silver metal added to SLV’s holdings Thursday 12/21 is higher than each of the previous four monthly additions (November 153.8, October 14.09, September 123.02 and August 247.35 tonnes of silver added to SLV holdings). Not since the week following SLV’s April 28 inception has there been a 200-plus tonne addition in one day and only a few weekly totals top 200 tonnes, the last one way back in June (June 19-23, 264.16 tonnes).
So, positive money flow continued for SLV in a huge way.

Now for gold...

This week gold holdings at streetTRACKS Gold Shares, the largest gold exchange traded fund [NYSE:GLD], added another 3.09 tonnes to 452.01 tonnes of gold bars held by a custodian in London for the trust. The previous week saw an addition of 7.4 tonnes.

That's 10 tonnes of gold added in two weeks. Wow!

XX My take -- we're seeing investment dollars "buy the dips" in both silver and gold. This is being helped by end-of-year rebalancing. Many investors probably figure that both gold and silver will be higher six months from now, so they're allocating money to ride that wave. And it looks to me they're getting gold at a sweet deal.

As for stocks -- Australian gold stocks are already going ballistic as Red-Hot Asian Tigers subscribers well know. Canadian stocks not so much -- but they should follow the trend. Sit tight, hold on, and we could be in for a rocket ride in precious metals in the first quarter.

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