While silver prices plunged on Friday, October 30, one of the world’s largest silver investment funds, iShares Silver Trust (SLV), significantly increased its physical silver holdings.
According to reported holdings data, the trust held 503.022 million ounces of silver, an increase of approximately 3.34 million ounces, or 104 metric tonnes, compared with the previous day.
Meanwhile, SLV shares fell 5.67%, and silver itself broke below the psychologically important $50-per-ounce level.
Another paradox? While investors watched silver prices collapse, the amount of physical silver held by the trust was actually increasing.
Friday’s sell-off may have created the impression that investors were abandoning silver. Yet SLV’s holdings tell us the situation was not quite so straightforward.
Falling prices do not automatically mean everyone is selling. While some investors close their positions, others may take advantage of lower prices to increase their exposure to silver.
That is why we believe it is important to monitor not only the silver price but also actual changes in the physical metal held by investment funds.
As explained in our overview of ETF flows, trading fund shares and changes in physical holdings are not the same thing. New shares can be created through authorised institutions in exchange for physical silver, while ordinary trades between investors do not change the amount of metal held by the trust.
An increase of 3.34 million ounces in a single day is therefore not insignificant. It shows that physical silver accumulation can continue in parts of the investment market even during a sharp sell-off.
Of course, this does not confirm that silver has reached a price bottom or prove that the market is preparing for a rally. Selling pressure could continue, and activity in a single fund does not necessarily represent the entire silver market.
Nevertheless, it is another remarkable contradiction that deserves attention.
If silver prices are falling sharply while one of the largest silver trusts is simultaneously increasing its physical holdings, we should ask: Is demand really disappearing, or is the sell-off simply changing who holds the silver?
The price alone cannot answer that question.
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