Silver ETF Holdings Have Been Expanding But Still Have Room To Grow.

(October 21, 2024 - Heraeus Precious Metals)

Despite silver prices hanging on to a level just below a 10-year high, silver ETF holdings remain similar to 2023 levels. This is despite net inflows of 30 million ozs so far this year, and an upswing from cumulative net sales of 19 moz as recently as June. Total holdings currently sit at 730 million ozs.

On balance, this seems to be a relatively muted response to the silver price reaching a decade-high this month. At their peak, silver ETF holdings reached more than 1 billion ounces, while the silver price was 15% lower than today. Silver has some significant tailwinds at the moment, which could help it to break out above $32/oz. Lower real interest rates support capital allocation into bullion, and China’s efforts to stimulate economic growth also lend support to silver from the industrial sector. Based on historical levels, investors have the capacity to increase holdings from the current base, but it will likely take a clear breakout to new highs to prompt this.

Friday saw gold close above $2,700/oz for the first time ever, and silver followed it higher, marking the highest close since 2012. This may be the start of a break-out for silver, but more closes above $32/oz will be needed to confirm it