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While exchange traded funds (ETFs) have been dumping gold in the first two months of 2013, exactly the reverse is happening in the silver ETFs. Total silver holdings now amount to a near-record 20,253.6 metric tons (tonnes). In the week ending March 1, ETFs added 67.8 tonnes of silver to their hoards, on top of an addition of 17.9 tonnes in the previous week.

The iShares Silver Trust (NYSEMKT: SLV) and the ETFS Physical Silver Shares (NYSEMKT: SIVR) are trading down more than 6% since the beginning of the year, but silver futures have performed even more poorly. According to a report from Standard Bank, net speculative length fell by more than 800 tonnes last week as 237.6 tonnes were unwound from long positions. Speculative shorts rose by 571.6 tonnes.

Sales of U.S. Silver Eagle coins set an all-time record in January and a new monthly record in February. Sales volume is about 50 ounces of silver for every ounce of gold, which translates to less than $1,500 for the silver compared with around $1,575 to $1,600 an ounce for gold. That is a nice discount.

The demand for silver from the physically backed ETFs is soaking up surplus stocks and may augur well for silver miners and silver prices. The Global X Silver Miners ETF (NYSEMKT: SIL) is off about 23% so far this year, while the PureFunds ISE Junior Silver Miners/Explorers ETF (NYSEMKT: SILJ) is off about 17%. Silver miners are faring no better than gold miners. Both continue to struggle with rising costs and lower grade ores.

The sell-off in gold ETFs may be winding down and that could stem the flow of investment in the silver funds. But as long as $1,500 buys more silver than it does gold, investors are likely to keep chasing the Devil’s metal.