The iShares Silver Trust (SLV) is currently facing a significant withdrawal of capital, despite a robust performance in silver prices. Over the past week, SLV has experienced seven straight days of redemptions, amounting to nearly $2.4 billion. This outflow marks the second-largest recorded for an exchange-traded fund (ETF) during this timeframe, highlighting a peculiar trend in market behavior.
While silver prices have surged at the beginning of the year, with SLV’s net asset value climbing from early January lows to around 107.35—an impressive escalation of about 64 percent year to date—investors are still pulling their money from the fund. The last recorded price of SLV was approximately 105.57. Notably, there have been several large daily outflows, including a particularly striking day that saw the fund lose nearly $766 million in capital.
This contradiction between increasing prices and dwindling investment in the ETF can be attributed to soaring physical demand for silver, especially from China. The high demand has led traders to withdraw physical silver directly from SLV’s holdings to meet market needs. The withdrawal rate is currently outpacing new purchases from investors eager to capitalize on rising prices, resulting in ongoing redemptions despite a bullish trend in silver values.
This unique situation underscores the fundamental dynamics of market behavior as physical demand continues to dominate over ETF inflows, reflecting an evolving landscape in how silver is both traded and valued globally. The ongoing demand for physical silver may ultimately yield a more balanced relationship between funds and market trends, paving the way for potential stabilization in capital flows moving forward.