A decision by the SEC is about to be made regarding whether or not to allow the creation of ETF's for silver (Exchange Traded Funds). These funds would allow the public to buy shares in a mutual fund backed by actual silver. This would be a good way to buy silver, which is otherwise physically bulky and heavy. The effect of this would be to remove large amounts of actual silver from the marketplace, decreasing supply and putting upward pressure on market value. If allowed, and a decision is expected any day, silver prices would probably SOAR UP -- perhaps to $15/oz. or so. Silver is at about $10/oz. right now. If, for instance, you have a long term silver option call, costing about $6,000. For every one dollar silver increases in value, the value of your option increases by$3,000 to $6,000.

Silver futures margins, the amount of money you have to have in your account to buy a silver futures contract (something I would never recommend by the way), have just been increased significantly. The fact that silver margins have just been increased suggests that perhaps the decision allowing silver ETF's has, in fact, already been made and is about to be made public. That is a distinct possibility.

There is, however, a huge amount of pressure NOT to allow ETF's in silver. Silver is a commodity with genuine utility. ETF's would have to back their shares with real silver. This means that a good percentage of all the above-ground silver in the world could become held by ETF's. The greatly decreased supply would send silver prices through the roof. Hence the pressure by companies using silver not to allow silver ETF's. So I don't know what will happen at this point. It's about 50/50 either way. Although, as I've said, the fact that silver futures margins have just been increased is suggestive of a forthcoming decision to allow them.

If ETF's are disallowed, silver prices will probably drop substantially -- for several to six months (probably). That's the other side of this coin flip. But that would give those not in the silver market an opportunity to get in at lower prices.

ETF's, if they are allowed, will be a good way for us to purchase silver, since buying shares of an ETF eliminates storage problems (the ETF's have to store the silver backing the silver shares they sell you).

Anyway, an interesting little drama taking place now in the silver market. Thought I'd let you know about it. I'm not recommending you do anything speculative in this regard at the moment, given the risk. But knowing about silver ETF's may come in handy one day for you.

By the way, gold ETF's already have been approved and exist. This is, I believe, a good way to buy gold -- and the gold ETF's have exerted upward pressure on the gold price for the same reason they would for silver -- although there's a lot more gold above ground than there is silver and silver has more commercial uses than gold.