*** Silver ETF no threat to mining stocks - analysts ***
"If the lessons from the gold ETFs translate into the potential silver ETF, assuming that it goes ahead, then I would say it won't cannibalize the stocks, and it will be, hopefully, another situation of a bigger pie for people who are interested in that asset class," said Victor Flores, metals analyst with HSBC Bank in New York." ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Yeah, right! So why did we have an eighteen month (or so) bear market in non blue chip gold shares begin shortly after the GOLD ETF officially started up in December of '03? Oh that's right..... I forgot! Merely a coincidence and the price of oil! But.... I digress..... it's been a long day.
Silver ETF no threat to mining stocks - analysts
Fri Feb 3, 2006 12:28 PM ET By Zach Howard
NEW YORK, Feb 3 (Reuters) - Investor interest in commodities has grown enough to support a proposed new silver exchange traded fund without steering money away from shares in companies that mine the white metal, and could even benefit silver companies by lifting prices for their end product.
Based on the success of several listed gold ETFs, the first silver-backed security would have little negative impact on equities, as it would likely spark more overall investment in the silver sector, analysts said on Friday.
"If the lessons from the gold ETFs translate into the potential silver ETF, assuming that it goes ahead, then I would say it won't cannibalize the stocks, and it will be, hopefully, another situation of a bigger pie for people who are interested in that asset class," said Victor Flores, metals analyst with HSBC Bank in New York.
Leading ETF provider Barclays Global Investors is seeking approval from the U.S. Securities and Exchange Commission for its iShares Silver Trust -- a security designed to reflect the price of silver and trade like listed stocks on an exchange.
The trust would be backed by silver bullion held in vaults in London, with each share worth about 10 ounces of silver.
If it gets approved, iShares looks to become a hit with investors, and mining shares could potentially even benefit, especially if silver prices continue their recent rally, said Paul McLeod, vice president of precious metals at Commerzbank.
McLeod said stocks including Coeur d'Alene Mines Corp. (CDE.N: Quote, Profile, Research), Hecla Mining Co. (HL.N: Quote, Profile, Research) and Pan American Silver Corp. (PAA.TO: Quote, Profile, Research) all rose sharply last week with the price of silver on speculation about the ETF nearing approval.
"There's new money coming in, as opposed to a shift to physical silver from ownership of stock, and I think both the mining stocks and the actual underlying silver are going to benefit," McLeod said.
Silver, which rose to a 22-year high this week close to $10 per ounce, is expected to rise further if the ETF launches, because a big amount of the market's metal would need to be purchased and stored to back the ETF.
Analysts also emphasized that there was no finite amount of money investors allocate to the silver market that would mean channeling funds away from equities and into an ETF.
They added that many investors who buy the gold ETFs say they weren't going to buy mining stocks anyway, because they want exposure to the commodity itself and don't want to take on the risks of stocks.
"They don't want issues of projects and different countries and management and all the risks that are associated with company shares," said HSBC's Flores.
"I think that if someone wanted pure exposure to silver they probably wouldn't be buying the stocks; most of them generally aren't really pure silver plays," he said.
Barclays hopes to launch the ETF soon to capture some of the interest powering precious metals prices higher and attracting big inflows into gold-backed investment vehicles.
The SEC has set a deadline of Feb. 13 for public comments to be submitted on iShares Silver and no word on approval is expected until well after that date.
Gold held in ETFs, including the largest one, streetTRACKS Gold Trust (GLD.N: Quote, Profile, Research), has increased dramatically. Gold ETFs have accumulated more than 440 tonnes, which would equate to the 12th-largest holding by any central bank.
Barclays launched its gold ETF -- iShares COMEX Gold Trust (IAU.A: Quote, Profile, Research) -- early last year.
Frank Holmes, chief executive of U.S. Global Investors, said a silver ETF would probably be a smash hit.
"It will probably be a very popular investment for people. I think you're going to see a trend of more commodities being set aside for pension groups and institutions," Holmes said
Market Data 
Markets 
AI
