Large Silver ETF Pulls in Record $1.7 Billion on Tuesday

By Amrith Ramkumar and Joe Wallace

About $1.7 billion flowed into the largest silver ETF, the iShares Silver Trust, on Tuesday, shattering the previous all-time high set last Friday, FactSet data show.

The huge inflow came even though silver prices and the ETF's shares tumbled, reversing a big Monday rally.

The activity shows how the iShares Silver Trust, which trades under the ticker SLV, has been at the center of recent silver-market volatility (https://www.wsj.com/articles/silver-etf-at-center-of-reddit-fueled-surge-11612281290). ETFs are one of the easiest ways for day traders and generalist professional investors to invest in precious metals without taking hold of any actual material.

When individuals buy shares of the ETF, they are buying a stake in a trust. The asset held by that trust is silver.

One of the ways traders make a market in the ETF--typically banks and other traders--is to buy physical metal from traders on the open market (https://www.wsj.com/articles/etf-boom-fuels-golds-sharp-rise-11598175001). Large inflows can signal that the metals are in high demand from global investors, a trend that then helps dictate sentiment in the futures market.

The traders selling to the ETF traders might also seek to hedge against a price increase by purchasing futures contracts, creating another link between ETFs and metals prices.

The influx into SLV was accompanied by a jump in the amount of silver changing hands in London, where much of the metal backing the fund resides.

Just over a billion troy ounces of silver were traded in city's over-the-counter market on each of Monday and Tuesday, according to the London Bullion Market Association, both slightly short of an all-time high in figures dating back to late 2018.

Silver futures were up about 2% at roughly $27 a troy ounce on Wednesday, stabilizing following yesterday's selloff.

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February 03, 2021 12:55 ET (17:55 GMT)

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