The short definition of an ETF is, "A mutual fund that trades like a stock." But that doesn't mean you should trade an ETF like you trade a stock. When you take a look at the chart of an ETF on your favorite charting software the results look like a stock. But making buy and sell decision on silver ETFs the same way as you would make on a stock from a stock chart could be disastrous.
Many, if not most, investment strategies that use charts to determine buy and sell points utilize volume in some manner; accumulation distribution, overbought/oversold indicators base on a volume-based algorithm, or chart patterns in conjunction with volume, to name a few. The very credible theory on volume is that the institutional investors are the only investors with enough clout to make a noticeable effect on volume. Volume in conjunction with price action, or chart patterns, indicate supply/demand for the stock by institutional investors. There is a great deal of evidence to back up the theory. So much so that every successful investor I have heard of includes some type of volume analysis in their method or investing system.
So why the warning against applying your stock investing methods to a precious metals ETF? Put simply, unlike the price of a traditional brick-and-mortar, financial, or dot.com stocks like General Motors, Bank of America, or Microsoft, the price of silver ETF like SLV does not depend upon supply/demand for SLV.
The price of GM depends upon supply/demand for shares of GM stock. However, the price of SLV is: the price of a troy ounce of silver minus operating expenses. It is the price of silver that drives the price of SLV, not supply/demand factors for shares of SLV. It might be more accurate to say that price drives supply/demand of SLV, not the other way around.
Some would say that the price of silver is driven by supply/demand, and therefore the price of SLV is too. I cannot argue against that point of view--long-term. But it is the resulting price of silver itself that determines the per share price of SLV. Also, short-term, the futures markets has more to do with the price of silver than supply/demand of physical silver. A silver futures contract is paper silver, and this paper silver is 99% controlled by speculators.
Long term, it is supply/demand for physical silver that controls the price of physical silver, and therefore, the per share price of SLV. Volume analysis of physical silver is relevant to the price of a SLV. But that information is difficult to come by. And the price of silver is becoming increasingly more emotion based.
As much as I like using chart-based investment strategies that incorporate volume, my silver investing is based on the fundamental factors.
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