Kevin Morrison in London wrote a Financial Times article New way to buy gold fuels price rise (subscription required).
They [Gold exchange traded funds (ETFs)] are the 12th largest holders of bullion after the US, Germany, the International Monetary Fund, France, Italy and Switzerland, which each hold between 1,300 and 8,200 tonnes.
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Many pension and mutual funds are not allowed to directly own commodity assets or futures, limiting their participation in commodity markets.
But this restriction has been overcome through ETFs, which are treated as an equity by regulators, and provide a new route for investors to join the commodity price boom.
I had not appreciated that the various funds were using the ETFs as a vehicle for circumventing regulatory and other possible fund restrictions. Extending that same logic to silver, I expect that silver prices will continue to rise on the expectation of greater demand from a potential silver ETF.
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