Silver ETF Vs. Silver Price

As demand is now being dictated for a part by the ETF's, we need to pay attention to what is happening in the trusts.

If you see the hedge funds buying (red chart goes up), you should become bullish.

You can monitor this chart daily at the iShares Silver trust site:
http://us.ishares.com/product_info/fund/downloads/SLV.htm

Chart 1: Silver Ounces in SLV Vs. SLV Price

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Sprott Silver at it Again

Sprott Silver is at it again. They announced that they will make another offering to buy physical silver. Luckily, the premium on silver is only 4% at this time, so we can't fall much further in premium.

http://sprottphysicalsilvertrust.mediaroom.com/index.php?s=14805&item=128178

What it does do is contribute to the explosion in the silver market eventually.

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ECB's LTRO I and LTRO II didn't work

On Zerohedge, the article of the ECB deposit facility sparked my attention. Apparently, banks are depositing their money into the ECB at an alarming rate (Chart 1).

Since the crisis of 2008, this deposit facility had risen a lot (250 billion euro), but has only recently skyrocketed to more than 800 billion euro.

This deposit facility at the ECB is a macro-economic indicator of market tension residing at the European banks. It is seen as a "safe haven" during economic turmoil in Europe. The higher this ECB deposit facility rises, the more banks favour the safety of the ECB deposit over higher returns in the interbank market. It shows that banks aren't lending to each other and also shows that appetite for European government bonds is declining.

Even though banks borrowed 489 billion euro (LTRO I) and 529.5 billion euros (LTRO II) in loans (at 1% lending rate) from the ECB, a lot of that money just went back into the ECB deposit facility at 0.25%. This means that banks are actually opting to lose money due to fear of a eurozone break-up.

To read the full analysis on this matter go to: The European Central Bank's LTRO Isn't Working Out.

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