Subject: File No. SR-Amex-2005-072
From: Scott Gale

January 29, 2006

As an individual investor, in my opinion, the SEC should approve the silver ETF. A silver ETF provides an additional, much-needed free market innovation to determine the value of silver in the marketplace.

Currently, silver may be bought in physical form (which is bulky), or on the futures exchange (in 5,000 ounce contracts). Buying and selling silver on the futures exchange is, realistically, only an option for the very wealthy, and for corporations and institutions. For less wealthy individuals, physical purchase is the only realistic option. Such physical purchases of silver cannot currently be easily made in retirement accounts - e.g. IRAs and 401Ks - which represents a considerable hardship for smaller investors.

Importantly, as less wealthy individuals are excluded to some degree under the current system from the silver market, the demand for, and thus the price of, silver is largely determined by large entities and wealthy individuals. A very small number of such entities and individuals currently exert considerable influence over the silver market. As a result, the price of silver fluctuates widely in boom-bust cycles. Such cycles make it more difficult for silver mining companies and the financeers of silver projects to plan for future production. As a result, there is underinvestment on the supply side of the silver equation. Should the silver ETF be approved, investors in the ETF would be allowed to more fully participate in the silver market. This should help to lessen the influence of the current controlling entities in the silver market, thus dampening the boom-bust cycles and allowing for better long-range planning and more efficient capital investment decisions amongst silver suppliers.

The taxation of silver sales by individual investors is a problem for the IRS. Coin shops and the like only report purchases from customers (sales by customers) when the amount exceeds 10,000 dollars. When smaller amounts are sold by customers, the IRS must rely upon the honesty of individual investors to report a gain. Although I have seen no data on silver-related tax receipts by the IRS, I would imagine that the IRS collects very little on such gains. The silver ETF would ameliorate this problem - in taxable accounts, all sales by customers would be reported by the brokerage companies to the IRS. In tax-deferred accounts, the IRS would eventually generate tax revenue when funds are eventually withdrawn.

I have read the comments against the silver ETF by the Silver Users Association, and have only one thing to say: consider the vested interests of the source.

Gold and silver are precious metals that have served for centuries as stores of value and, from time to time, money. The gold ETF was approved by the SEC, and has been well received in the marketplace, with no adverse events to date. The silver ETF should be similarly well received. To approve the gold ETF and not the silver ETF would be logically inconsistent.

I urge the SEC to approve the silver ETF, so as to provide smaller investors like myself a reasonable additional method to buy and sell silver, and one that can easily be utilized within taxable and tax-deferred accounts.

At its core, the silver ETF issue is one of free markets. If the SEC truly promotes and believes in free markets, it should approve the silver ETF. To not approve the silver ETF, the SEC would effectively be saying: "We promote free markets so long as no large corporations object."