-->ETF FOCUS
Silver bullet cocked and ready
SEC approves Barclays ETF, launch expected Friday on Amex
By John Spence, MarketWatch
Last Update: 11:55 AM ET Apr 27, 2006
BOSTON (MarketWatch) -- At long last, a silver exchange-traded fund that has been in the works for over a year is expected to begin trading Friday.
A registration statement for the highly-anticipated ETF from Barclays Global Investors was declared effective at 10 a.m. Eastern time Thursday by the Securities and Exchange Commission, clearing the way for the ETF to list, an SEC spokesman said.
BGI spokeswoman Christine Hudacko said the unit of British bank Barclays Plc (UK:BARC: news, chart, profile) (BCSBarclays PLC
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BCS ) plans to launch the silver ETF on the American Stock Exchange on Friday. The trust is expected to trade under the symbol"SLV," according to regulatory documents.
Earlier this week in a filing, Barclays said 1.5 million ounces of silver had been deposited in the trust, which is slated to charge a sponsor fee of 0.5% of assets.
Speculation on the silver ETF's imminent launch has been pushing up silver prices, which earlier this month hit multi-decade highs. The ETF, which for the first time allows individual investors to invest in silver without holding the metal or tapping futures markets, could bolster demand for the metal.
Dubbed iShares Silver Trust, shares of the ETF represent 10 ounces of the metal held in a vault. ETFs are baskets of securities that trade on exchanges like stocks, so investors can go short as well as long, and must pay broker fees to buy and sell shares.
Two existing gold ETFs, StreetTracks Gold Trust (GLDstreetTRACKS Gold
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GLD ) and iShares Comex Gold Trust (IAUishares comex gold tr ishares
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IAU ), have been popular with investors. The first mover, StreetTracks Gold Trust, has gathered about $6.5 billion since its November 2004 inception in one of the more successful fund launches in recent memory.
The silver ETF has taken several twists and turns before it was finally approved by regulators.
The Silver Users Association, a nonprofit lobby group interested in keeping an orderly silver market, had led the opposition to the silver ETF. The group alleged the trust would take a large amount of silver off the market and push up prices, which would hurt firms that use the metal for business or industrial purposes and result in layoffs.
However, after a public comment period, the SEC said the silver ETF would increase the efficiency and transparency of the silver market, and that it would not spark liquidity problems.
Some traders are expecting the ETF may usher in a new bull market for silver if it attracts money from individuals, advisers, institutions and hedge funds looking for a convenient way to get exposure to the precious metal. However, if history is any guide, the trend with gold ETFs introduced around the globe has been a run-up in the weeks up to the launch with a pullback in the weeks after the start of trading. See earlier story.
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