Resource Investor notes SEC''s movement on silver ETF

Section:

By Charles Mackay
The Wall Street Examiner
Wednesday, January 24, 2006

http://wallstreetexaminer.com/?itemid=2078

It's coming. Despite roadblocks put up by the Silver Users
Association, the Securities and Exchange Commission (SEC), in
conjunction with the American Stock Exchange, has proposed new rules
that will guide the trading of the upcoming silver exchange-traded
fund (ETF).

Let's be clear -- the proposed rule from the SEC governing trading
of the silver ETF --

http://www.sec.gov/rules/sro/amex/34-53130.pdf

-- should not be confused with the pending registration of iShares
Silver Trust (SLV) shares with the SEC. These are separate matters.
However, the SEC action indicates the very clear intention of the
SEC and AMEX to prepare for the eventual trading of the silver ETF.
The proposed rule will take at least until February 7, 2006, to be
approved, and possibly it could be subject to further delays and/or
changes.

The Silver Users Association (SUA) fears that the iShares Silver
Trust will cause investors to buy silver -- and that this will
result in a shortage of silver for users. But the SEC sees no
present shortage of silver available for trading. The SEC says in
the rule proposal that "there are published sources that do suggest
the significant size of the overall market."

There may be a shortage of silver in the future, but the SUA's
arguments shouldn't prevent the registration of the silver ETF's
shares. The SEC has no authority to act on forecasts concerning the
price and availability of silver. After all, isn't the purpose of
the market place to allow willing buyers and sellers to set the
price of commodity or stock -- and allow it to fluctuate over time?
And since the silver ETF, by its own definition, requires the
physical possession of the commodity -- silver -- there can be no
trading of the silver ETF shares unless it manages to acquire
silver.

The SEC previously approved the stock registration of a similar
trust for gold, set trading rules, and granted them special
exemptions. While there is no guarantee of approval, it looks
increasingly likely it will follow the same course for the silver
trust -- and approve the registration of SLV.

Be prepared for the spotlight to shine on silver.

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