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SLV - Similar discussion back in 2011 from SA - https://seekingalpha.com/article/265085-does-ishares-slv-etf-really-hold-silver#comments
Does iShares SLV ETF Really Hold Silver?
Apr. 24, 2011 7:00 AM ETiShares Silver Trust ETF (SLV)52 Comments
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Hobbes Investment Research
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Value, Long/Short Equity, Long-Term Horizon, Medium-Term Horizon
Contributor Since 2011
Devin Hobbes is the author of the soon to be updated Dividends: Pros, Cons, Sources, and Strategies.
The iShares Silver Trust (NYSEARCA:SLV) has been the subject of controversy since it first started trading. The objective of the exchange traded fund, according to the iShares website:
Is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.
That is, there's supposed to be a vault somewhere with a bunch of physical silver and each share of the SLV is supposed to represent about an ounce.
Three main parties are responsible for the SLV. The sponsor, iShares, is a subsidiary of BlackRock (NYSE:BLK). It arranged for the creation of the trust and its listing on the NYSE Arca. It assumes certain marketing and administrative expenses of the trust.
The trustee is Bank of New York Mellon (NYSE:BK). It is responsible for the day to day administration of the trust, including processing orders, coordinating with the custodian, calculating the net asset value of the trust, and selling the trust's silver to pay for expenses.
The custodian is JPMorgan Chase (NYSE:JPM). It is responsible for holding the trust's physical silver in its vaults. The prospectus states that JPM:
Is responsible to the trustee [Bank of New York] only. Because the holders of iShares are not parties to the custodian agreement, their claims against the custodian may be limited.
Interesting.
The controversy is whether there is a vault that actually contains the amount of silver iShares says it does. Mainstream media hasn't weighed in on one side or another, but the blogosphere and Youtube are full of various accusations and speculation.
An interesting thing happened a day or so ago. According to Zero Hedge, Kevin Feldman, managing director of iShares, issued a refutation of the rumors that the SLV contains no physical silver.
This reminds me of the CEOs of Bear Stearns and Lehman Brothers saying everything is fine shortly before their banks collapsed. It's also reminiscent of the other Wall Street CEOs saying everything was great and they didn't need to borrow any money while they were borrowing billions and teetering on the edge of insolvency. It also brings to mind the often quoted phrase, "never believe anything until it's been officially denied."
People are suspicious of the SLV for a number of reasons. Here are two.
First, there is a silver shortage. Eric Sprott, who runs, among other things, a physical silver fund (NYSEARCA:PSLV), has commented often in the recent past on how hard it is to buy physical silver in large amounts. Various mints, including the US Mint, are also unable to get sufficient supplies.
Second, the silver shortage has caused premiums for the physical metal to skyrocket. Sprott's fund has traded in recent days at about a 20% premium to the spot price. Silver coins at shops like the American Precious Metals exchange sell for a premium of over 9%.
Add these two together and it seems really weird that the SLV can increase and reduce its silver holdings daily seemingly with no trouble. For example, they decreased their holdings by 33 metric tons on Thursday.
All the data is available on the iShares website in the left hand column. Here is a chart of the trust's silver holdings since the start of April (click to enlarge):
How is it possible for the SLV to buy and sell such large quantities of silver on a daily basis when no one else, it seems, can do so? It's expensive to procure physical silver, and usually takes much longer than a day. Transportation costs would presumably also present a problem.
According to the Inspection of Silver Bullion document on the SLV website (dated July 2010), there are two vaults operated by JPM, two vaults operated by Brinks Global Services, and one vault operated by Via Mat International. That makes five vaults in total with subcustodians operating three. What comes to mind is guys with forklifts moving bullion from one part of a warehouse to another, into the account of another silver market participant. So, for example, when the SLV dumped 33 metric tons of silver the other day, guys on forklifts in one or more warehouses moved the silver from Bank of New York Mellon's account to the accounts of whoever bought it.
The portion of the SLV prospectus that deals with the custodian seems to suggest that this is what takes place. (I say seems because I read it a number of times and am still not quite sure I understand it. It's among the more convoluted things I've read in my life, and I'm a law school graduate. I doubt that the obfuscation in the prospectus is accidental.)
But another question arises. How are buyers and sellers so readily available daily? Buyers at the moment are not a problem, given that there is a shortage. Sellers, on the other hand, are presumably hard to come by. (Maybe the custodian deposits the silver into its own accounts and then sells it back to the trust? I'd like to know.)
Moreover, can the prospectus and inspection certificate be trusted? Banks are not generally regarded as the most honest businesses, as one scandal after another has shown.
Banks have a particularly sordid history with silver. Here are a couple of recent examples.
There's currently a class action lawsuit against UBS that alleges the bank sold investors phantom silver. The plaintiff alleges that he bought silver bars from UBS, paying the bank monthly storage fees. After a while he decided to store the bars himself and demanded delivery of the metal. UBS didn't comply. After a series of ever more frustrating queries, plaintiff finally learned that UBS never purchased silver bars for him. The bank eventually responded, in a purposefully confusing letter, that he would have to sell his current "unallocated position" and buy "a silver position," at additional expense. So the plaintiff paid storage fees for no reason at all. And all that time the bank had apparently led him to believe that he had "a silver position," that is, specific silver bars segregated for him in a vault.
In 2007, Morgan Stanley (NYSE:MS) agreed to pay $4.4 million dollars to settle a suit that alleged a similar scheme. In that case Morgan Stanley claimed that it followed industry practices. It has been suggested that "banks are in the habit of keeping only 1 bar for every hundred that are supposed to be in their vaults." If it's industry practice to make investors believe they're purchasing physical silver when in fact they are not, it is conceivable that the same sort of thing is involved in SLV. Given that JPMorgan, the custodian of the silver in SLV, has been investigated for silver manipulation I would say that more than conceivable, it is likely. How many claims are there on the allocated bars in the five vaults?
So, to summarize, there have been rumors and questions about the SLV's silver holdings. A banker from BlackRock took the time to officially deny these rumors. That's suspicious. The SLV prospectus in its vague language suggests that there is actual physical silver owned by the trust. It also answers, sort of, some of the questions regarding how such vast amounts of silver are bought and sold daily while other market participants have to wait weeks and months for delivery. But bankers have historically not been very honest people in general and their recent activities with silver do nothing to assuage people's suspicions.
Since BlackRock's official denial will most likely backfire, instead of directing investors to the prospectus, Mr. Feldman should answer some of the more practical questions that people have in simple language.
Disclosure: Long physical silver.
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Comments (52)
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magichr
26 Aug. 2012, 11:18 AM
Comments (1.61K)
I trust slv over going to some store and supposedly buying real silver. But if buy it at a store they over price it by 10% and if you sell it back they give you a price under 10% so it a 20% loss. Thats the real robbery. But at least its in a vault and you just pay whatever the stock price is of it and you can sell it at the stock price. The point is its backed by some big banks. Thats the key. Its been around for 6 years anyone who believe that conspiracy theory stuff needs to find a new hobby. Your stocks are fine but if you got a store your just dealing with some guy who can be selling you fake gold or silver. Id rather trust a big bank them some guy who owns a hole in the wall gold shop. They been getting caught on so many scams especially using tungsten metal to pass as real precious metal. Its funny a ton of people bought a bunch of fake metals and don't even know it yet.
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Econo
23 Apr. 2012, 5:24 PM
Comments (25)
People investing in SLV know that there's no silver. But it's a Keno kind of investment which I sometimes also play.
Why do people play in online casino's? Same thing, different interface.
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Amateur__investor
30 Apr. 2011, 8:45 AM
Comments (759)
I don't believe these etf's actually have the silver bars and ingots at all.They can't print the serial numbers because they don't exist. What is needed is an independent outside source, verified, outside of Wall Street that can attain to the true existence of vaults where these assets are held. Wall Street is not to be trusted. Too many Madoff's in the works. There is way too much silver being bought and sold every day to account for these daily movements. I am a coin collector and I prefer tho have the silver coins in my collection than to take a chance on a ponzi scheme that these people are running.
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PEhrlich
30 Apr. 2011, 10:26 AM
Comments (1.70K)
The serial numbers have been posted on the SLV website.
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L'wood
29 Apr. 2011, 7:33 PM
Comments (25)
Take a look at CEF, Central Fund of Canada. It is actually selling at a discount - 45% gold and 55% silver. The PMs are stored in vaults in Canada and independently audited every six months. This is a stable company selling at a discount to NAV. Personally, I would never buy GLD or SLV. Sprott silver is promoted nicely, but really, a 20% premium.
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The Reader
26 Apr. 2011, 1:47 AM
Marketplace
Comments (282)
Sold all of my SLV shares today. One third of my silver holdings. Price going too high, to fast. Something will give. Secondly, JPM as the custodian? No thank you. I realize that JPM inherited from Barclays, however like GS selling derivatives to their customers and shorting them elsewhere or George Soros telling people that Gold was overbought while all the while buying more...
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Mark Anthony
25 Apr. 2011, 5:53 PM
Comments (3.59K)
This web site, I don't know who created it, tracks the week by week change in the SLV silver bars list:
about.ag/slv/
Very interesting to look at it week by week.
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Mark Anthony
25 Apr. 2011, 5:20 PM
Comments (3.59K)
I am sending email inquiring Henan Yuguang Gold-Lead Co. to verify if they had minted the kind of "Henan Yuguang" silver bars as listed on SLV's list.
I think they are highly suspicious. Legitimate "Henan Yuguang" silver bars have 11 digits serial numbers: 4 digits year plus 7 digits number.
More over, the refinery produced only 600 tons of silver per year, in ALL forms of silver. Only a small fraction would have been minted into 1000 ounces bars. Even a much smaller portion would have been exported out of China.
SLV is claiming much more "Henan Yuguang" silver bars in its list, that it could have reasonably acquired from the company. More over, none of the serial number matches the 4+7 digits format.
Will keep you guys updated if I get a response.
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(1)
Silversimon
25 Apr. 2011, 1:41 AM
Comments (2)
How JPM could cover it's massive short if there is mostly real silver in SLV:
1/ Quietly discredit SLV causing a massive run on the shares.
2/ Buy the shares for next to nothing.
3/ Liquidate the fund and take the silver.
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Silversimon
25 Apr. 2011, 1:32 AM
Comments (2)
What if SLV is mostly backed by physical silver and JPM discredits it on purpose, the shares crash and JPM buys the shares for peanuts and covers it's massive short?
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(1)
Independent1
24 Apr. 2011, 11:57 PM
Comments (16)
Kids, calm down. If you don't trust JPM, BLK or paper, don't buy SLV...simple as that...I'm sure they don't have all the silver they claim to, but I suspect that they have contracts, certificates, and various other bits of paper stating that the silver is on the way. And then they have bars too. Not much comfort when the shite hits the fan, but then SLV wasn't going to help much with that, now was it?
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alpha_zeta
24 Apr. 2011, 9:44 PM
Comments (126)
How about they (JPM , Blackrock ,ishares, custodian) list the serial number for each bar of silver held or disposed of in the Trust ?
Some other Trusts, for example, Claymore do so list the serial numbers.
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drini1
24 Apr. 2011, 9:02 PM
Comments (9)
All the SLV holder want it to higer but I see a bubble here its gone up 180% 10 months about 50% in 1month which is unrealistic. SLV does not have to be backed up by physical metal. It has to track the price and hold some silver, not sure which day but the bankers are going to crash this baby very soon by Wed when April contracts are setttled. So buyers should be very careful here and for shorts I think they need to stay out now and wait for the big guys like GS, JPM, CITI do they part to kill this and will happen these guys have unlimit control of the price and if they are short as it appears to be the case here the the longs are in for a big loss.
Also these guys are likely selling the physical metal at a large profit and at the same time shorting the ETF and futures and we will know this very soon. This has always been the case not sure why it not the same this time. I would not bet against these guys they have unlimited access to money and info.
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ZiggyK
24 Apr. 2011, 7:36 PM
Comments (42)
Sounds like a conspiracy made to make SLV go down in price so somebody doesn't have to cover their calls or lose money because they didn't already do it. Seeing how large investors often sell or buy alot of shares right near the expiration of options so they can manipulate the prices in their favor, it wouldn't surprise me that the same guys are starting up conspiracy theories for the same purpose. I'll be selling my SLV shares once it hits $49-50 but not because of any conspiracy theory. It will be because silver will be hitting a high point that may pose a correction and I will have made enough profit so as to feel that I do not have to be greedy and risk seeing my profits get lost if the correction does begin.
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(1)
manushi
24 Apr. 2011, 4:26 PM
Comments (21)
It does seem odd that you, Mr. Hobbs would trust Eric Sprott,
a private businessman, in the silver game just for his own gain,
yelping about supply delays to justify
20% premium on shares of his private enterprise, PSLV.
Coins always carry a premium for the minting and ease
of handling, it's a given, still not a 20% premium!
I would say the Sprotts are just greedy , which is perfectly
legitimate, blaming supply problems to hide it, and you fell for it.
Mr. Feldman of SLV is doing his job by coming out openly
and addressing the issue in a fast and direct manner.
This was an excellent move , no hiding behind PR offices
etc. and I wish more executive would do the same more often.
Using this against SLV had anecdotal / infantile traits to it.
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(3)
The Reader
24 Apr. 2011, 3:23 PM
Marketplace
Comments (282)
If you are not comfortable then sell your shares and purchase SIVR or something else. I am not an expert in document color, serial numbers and third party vaults. Frankly I do not trust a Bank that has been significantly shorting a specific commodity for some time to be the "keeper of the gate" of the same commodity that I want to own shares in. Read over the weekend that several large Dealers are currently "out of stock" of American Silver Eagles. The price is rising and it is getting very interesting.
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(3)
Mike Merrill
24 Apr. 2011, 10:59 PM
Comments (552)
Excellent point, Reader. The fundamental conflict of interest is what creates the problem to begin with. If you want to be the custodian, you can't also bet against it. Could Blackrock fire JPM as the custodian and hire someone else?
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Mark Anthony
24 Apr. 2011, 2:42 PM
Comments (3.59K)
SLV publishes a silver bars serial number list, and a presumed audit certificate by Inspectorate International. Both documents raised suspicion of fraud if you scrutinize them. Read here:
seekingalpha.com/artic...
and here:
seekingalpha.com/insta...
Although some one claimed to represent Inspectorate emailed me and claimed that the audit report was legitimate it does NOT remove my suspicion. I find a further suspicion that on the first and second page of the audit report, the LOGO has different colors. One is much lighter and another is much darker. These do NOT appear to be original Inspectorate stationery paper sheets.
us.ishares.com/content...
The silver bars list are more questionable. They have all the silver bars in contiguous sequential numbers, often times begins from bar No. 1. That is statistically impossible.
Now, here is one new point I am making: The vast majority of silver produced are industry silver and they are usually made into the form of powder, foam, or grains of silver called silver shots. Silver in such form are much easier for industry users to use them.
Only a very small percentage of the world's silver production is made into silver bars, even less is made into silver bullion bars. Among which, even less are made into the 1000 ounces bars.
However, EACH and EVERY silver bar that SLV claims to hold, are 1000 ounce silver bars. Every single one. There is no exception. There is no 100 ounce bars or 1 kilogram bars. Every single one they have are in 1000 ounce bars.
How could that be possible? They probably hold more 1000 ounce silver bars than all the 1000 bars the world had ever produced!
And yet they hold not a silve bar which is not 1000 ounces.
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PEhrlich
24 Apr. 2011, 7:57 PM
Comments (1.70K)
Mark, I think you're failing to take into account that iShares currently holds nearly 50% of the world's above ground silver. They don't walk into Jim-Bob's coin shop and buy silver bars retail. The only practical way to operate on this scale is to have longstanding contracts directly with the refiners, who are going to give them the bars with sequential serial numbers and in whatever size they request.
The variability in month to month demand for silver by SLV is fairly modest. Getting the silver delivered when they need it directly from the refiner should not be a problem with a long term contract.
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Mark Anthony
25 Apr. 2011, 1:39 AM
Comments (3.59K)
That is nonsense. SLV is not supposed to be an active silver hoarder/investor itself. It is an ETF which means it is market neutral: If more investors buy SLV shares then selling, then SLV bids for physical silver in the spot market, if more investors are selling than buying SLV shares, then SLV is supposed to sell silver into spot market. It operates in the spot market, based on investor sentiments.
SLV does NOT go all the way reaching out to silver refineries asking them to mint silver bars to specific specification. Just like SLV does not go all the way of trucking a whole load of silver bars delivered to refineries and ask them to melt them down.
SLV only reach as far as the spot market. Whatever is available in the spot market, is whatever SLV will buy or sell. At least that is how it should operate in principle.
So it is suspicious how could SLV have such a complete collection of virtually any silver bar you can think of, with successive sequential bar serial numbers, some start with No. 1
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(1)
BrookfieldG
24 Apr. 2011, 2:21 PM
Comments (159)
Although it will never satisfy the conspiracy theorists and doomsday scenario PM-bugs, can we see a physical audit of the amount of metal in the vaults free of other claims verified by an appropriate firm letting the analysts do the math on how close that comes to the shares on the market.? I will accept the CEO's signature regarding "free of other claims" as adequate.
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searcher
24 Apr. 2011, 1:56 PM
Comments (1.68K)
After comment of Apr 24 01:16 PM regarding published serial numbers and denials and/or lack of same etc., it's apparent that much of the commentary resembles that of a "Who's on first" routine. You cannot use logic to address these suspicions. The surreal circumstances and multiplying conspirators will emerge to support the fantasy as the situation demands. After a specific issue is addressed, if inconveniently secure, it will be blithely ignored.
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Drewskers
24 Apr. 2011, 1:47 PM
Comments (55)
"it seems really weird that the SLV can increase and reduce its silver holdings daily seemingly with no trouble"
It would seem really weird if you had even the vaguest comprehension of how an ETF works.
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Hobbes Investment Research
24 Apr. 2011, 2:54 PM
Comments (14)
Then enlighten me. How does the custodian load and unload physical silver daily?
April 20, SLV increases its silver holdings by 67 metric tons. April 21, SLV decreases its holdings by 33.39 metric tons. On April 20, where did the 67 metric tons come from? On April 21, where did the 33.39 metric tons go?
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(4)
Amateur__investor
24 Apr. 2011, 1:32 PM
Comments (759)
Totally agree. i don't believe they have the actual silver. This is another con job by Wall Street. I will never invest with them. If people are smart, they will abstain also. remember Lehman Bros. and AIG
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(1)
Michael_Smith
24 Apr. 2011, 1:16 PM
Comments (6)
they might have some, but certainly not enough to cover all the paper they have printed.
would get out of SLV or any paper backed ETF - it has to be Physical.
PSLV is the way to go - the 20%+ premium will only rise as people discover SLV vaults are empty.
If SLV has the physical to back up its paper - why not release the serial #s of the physical Silver it has in its vaults ???
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(2)
Hobbes Investment Research
24 Apr. 2011, 2:13 PM
Comments (14)
>If SLV has the physical to back up its paper - why not release the serial #s of the physical Silver it has in its vaults ???
These are in fact released and updated regularly:
ebts.jpmorgan.com/meta... (Note that this is a 13mb file with over 5,600 pages). You may also find useful the analysis here: about.ag/slv/#info
This bar list by itself, though, does not answer the questions that I pose in the article.
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(3)
Mike Merrill
24 Apr. 2011, 10:55 PM
Comments (552)
As an investor who owns shares in SLV, all the doubts and consipiracy theories are cause for concern. Would the simple solution be for Blackrock to require JP Morgan to submit to an outside audit?
As SilverMeister pointed out, there is also the question of whether the silver physically present is leased, borrowed, or hedged against other positions. An audit would address that- assuming that it was done by a reliable third party (if there is such a thing anymore). It seems like it would be in Blackrock's best interest to make sure their custodian (JPM) isn't dealing off the bottom of the deck. Otherwise, Blackrock would be on the hook.
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(1)
PEhrlich
24 Apr. 2011, 12:18 PM
Comments (1.70K)
Given the quantity of silver claimed to be physically present in the iShares vault, there would have to be scores if not hundreds of counterparties. Each of which would be in a position to blackmail a $38B company.
The number of co-conspirators who have to be kept in line seems too high for these to be realistic possibilities.
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(3)
SilverMeister
24 Apr. 2011, 12:07 PM
Comments (1)
Whether or not the silver is actually there only constitutes one point of inquiry. The other (which not enough people focus on) is centered around whether it is unencumbered. ie. Is it leased, borrowed, hedged against other positions, multiple claims against it etc. ? Who knows...?
IMO, there is a disturbing lack of transparency & clarity involved here. And the questionable legalese of the prospectus only amplifies the concerns.
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(4)
mdw70
24 Apr. 2011, 11:51 AM
Comments (60)
Maybe they consider a "vault" a mining shaft. They get the silver and you get the shaft......
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(4)
rash91
24 Apr. 2011, 11:09 AM
Comments (1)
After all the corruption the banking industry has committed, who would risk having anything to do with banking on most levels except to hold their bullion in a rental box or some weekly check writing for expenses?
Seriously now, didn't you learn anything?
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(6)
Conventional Wisdumb
24 Apr. 2011, 10:54 AM
Comments (1.80K)
If you think SLV is a fraud then the price of silver is either artificially high or low. This poses an interesting paradox. The lack of available supply resulting from a fraud would imply that prices are being suppressed. However, the flipside is that the demand from the buyers of the SLV might be a major force in raising the price as well, which could result in a collapse of the price if a Madoff style scam was revealed and buyer sentiment soured worldwide.
I am entirely agnostic on the issue but it is interesting. You would create a pretty impressive publishing sub-industry if this turned out to be true :)
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(1)
Michael_Smith
24 Apr. 2011, 1:24 PM
Comments (6)
interesting points.
I feel JP Morgan is quietly going about acquiring the physical silver it needs to back up SLV - which in turn is also driving the price way up.
Its the only way for JP Morgan to come out of this alive - their days of shorting are over, and the true price of Silver will soon enough be realized - $100 + per ounce.
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(1)
highlarche
24 Apr. 2011, 10:51 AM
Comments (163)
I like SIVR and CEF
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(5)
AllStreets
24 Apr. 2011, 10:38 AM
Comments (2.04K)
I once read most of the prospectus and also read a number of articles discussing this question. I'm not going to research this again now, but my recollection is that there are cerain authorized market makers apart from the custodians and subcustodians who may redeem SLV's for physial silver (and vice versa) in a minimum quantity much larger than any typical retail investor would. If that's the case then the larger ebbs and flows of physical silver held by the SLV trust could be accounted for by those dealers' activities. Such dealers wouldn't necessarily be interested in selling physical silver to the public, and, in fact, might merely be acting in behalf of their clients who were holding large positions in SLV who also don't intend to sell the physical to end users or other retail buyers. Anybody know if this is possible?
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JD59
24 Apr. 2011, 10:18 AM
Comments (83)
SLV has no silver is their vault IMO! I can't verify it, but IMO it is a SUPER FRAUD! If JP Morgan is involved then I suspect their is fraud!
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PEhrlich
24 Apr. 2011, 10:28 AM
Comments (1.70K)
I guess the question I would ask is what you would accept as "prooof" that the silver is actually there.
They have the serial numbers of the bars on their website, which shows bars from about 20 different refiners. If any fictitious bars were added to the list, any one of these refiners could blow iShares out of the water by pointing out that they never sold iShares a bar with that serial number. Assuming each of these companies has 20 employees who have access to the list of bars actually sold to iShares, we just added another 400 people to the list of necessary co-conspirators.
Judging from many of the comments I see on this subject, I suspect that for many of the commenters on SA there is no level of proof that would be acceptable, because the suspicion is ideologically driven.
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winstonc
24 Apr. 2011, 10:44 AM
Comments (214)
Your comment supposes that refiners keep track of where their bars go after they have been sold for the first time from the refinery. They don't.
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PEhrlich
24 Apr. 2011, 10:59 AM
Comments (1.70K)
I was thinking of fictitious bars (serial numbers) rather than claiming to own real bars owned by others, but I address your point below.
Your point is a good one, but it only increases the size of the list of necessary co-conspirators. iShares would not be able to track where these bars went either. Every owner of physical silver in the world can look at the iShares inventory list, and could drop a dime to the WSJ if they found any matches between the iShares claimed inventory and bars in their own possession.
I would urge all the skeptics on this board to do just that. Get out your list of bar serial numbers and check them against the iShares list.
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PEhrlich
24 Apr. 2011, 11:21 AM
Comments (1.70K)
I'll add to this comment that the list of bar serial numbers on the iShares website represents almost 50% of the CPM group's estimate of total above ground silver. (CPM group is the consulting firm that generates all the silver supply and utilization data on the Silver Institute website). So if even 10% of the serial numbers listed correspond to silver owned by others, the falsely claimed serial numbers should correspond to at least 5% of all bars in existence. If none of the commenters on this article can identify a bar in their possession that is on the list, the author's thesis begins to look unsupportable.
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Hobbes Investment Research
24 Apr. 2011, 1:31 PM
Comments (14)
That is a great question. Everything can be faked. At some point, whether it is reading the prospectus, actually visiting the vault, or something in between, one must simply trust that what one is being told is true.
What I'd like to see is more transparency. I'd like to know, exactly and in simple language, how silver is delivered into the trust's account and how it is sold. What actually happens in these vaults on a daily basis? To whom is the silver sold? From whom is it bought? How many parties have a right to this silver?
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Mark Anthony
24 Apr. 2011, 3:11 PM
Comments (3.59K)
You said: "If none of the commenters on this article can identify a bar in their possession that is on the list, the author's thesis begins to look unsupportable."
Your logic is invalid. Most likely the silver bars listed in SLV's list are simply fictitious and no silver bar with the listed serial numebr ever existed, whether in SLV's possession or in any one's.
For example. Any silver bar produced by the Great Wall Refinery in China should have a 7 digit serial number, as shown in the picture below. But even though they listed hundreds of thousands of Great Wall silver bars, NONE of the Great Wall brand silver bar listed in SLV's list contain a seven digit serial number, not even one piece:
cdccgold.scol.com.cn/c...
Go exam their (SLV) silver bars list yourself.
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PEhrlich
24 Apr. 2011, 7:44 PM
Comments (1.70K)
Mark, I'll offer two responses here.
First, there's no way they would ever get away with (or risk, remember that this is a $32B company) publishing a list of fake numbers, whether they are fictitious numbers or numbers from someone else's bars. Either way there are people out there who could make millions if not billions by exposing the fraud. The refining companies are going to recognize immediately if fictitious serial numbers are in the list, and a simple call to the WSJ pushes the value of their silver holdings up three fold.
The fact that the bar seen in a picture on a website appears to have 7 digits (I can't read what's on the far side of the bar), doesn't mean that they all have seven digits. And it would fall well within human nature for someone cataloging hundreds of thousands of bars to leave off the first 3 digits if they were all the same. This sounds to me much more like the type of thing that would occur in a manual inventory process than a computer driven generation of fake numbers.
I think the bottom line is that if they gave you a personal tour of the vault, you would claim that they were showing you silver plated lead. If they let you assay the bars, you would claim that the rented the silver for the purpose of the tour and swept it away as soon as you left. And if they let you live in the vault, you'd claim that they went out and bought all the silver for the first time the day before you moved in.
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Margret
30 Apr. 2011, 3:11 AM
Comments (22)
"First, there's no way they would ever get away with (or risk, remember that this is a $32B company)"
How big was Enron before it collapsed? :)
Or any one of the other big banks that have failed in the past.
I'm not saying it's one way or the other, but when commodities including silver are commonly traded with 100 to 1 ratio of physical, and banks selling unallocated silver to individual customers, and common practice for banks to store only a single bar for every 100 paper sold, it's not surprising that there are rumors the same is happening with ETFs.
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PEhrlich
30 Apr. 2011, 4:13 AM
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True enough, but if they don't actually hold the bars, how would it be in their interests to publish a list of fake serial numbers? Doing so makes exposure more likely not less.
Not only would any of the two dozen or so refiners in the list be able to expose the whole scam, they would have signficant motivation to do so. The price of their silver holdings would go up, and there would be potential liability issues if they did not.
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PEhrlich
24 Apr. 2011, 9:50 AM
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" A banker from BlackRock took the time to officially deny these rumors. That's suspicious."
What exactly do you expect Blackrock to do in this situation? If they remained silent, this article would have almost certainly contained the accusatory statement that "No one from Blackrock has denied these rumors".
Welcome to 1984. Denial is evidence of guilt. As is failure to deny.
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Hobbes Investment Research
24 Apr. 2011, 1:11 PM
Comments (14)
>What exactly do you expect Blackrock to do in this situation?
What exactly is the situation? What happened that BLK decided to issue a denial? Except for the fund growing in asset value and having a steadily higher trading volume nothing appears to have changed either in the last three years that BLK has owned iShares or during the two years before that when the SLV was sponsored by Barclays. No one in the mainstream media, to my knowledge, has expressed skepticism about SLV's holdings. The accusations from the blogs, forums, and Youtube have been the same for the last five years.
It is suspicious that now, all of the sudden, these rumors are being addressed. The reason for the change may be benign, but how can it not be suspicious given the events of the last decade?
>If they remained silent, this article would have almost certainly contained the accusatory statement that "No one from Blackrock has denied these rumors".
Actually, I wouldn't have written anything. The impetus of the post was Feldman's denial.
Nevertheless, you make a valid point that the banks find themselves in a kind of catch 22. BK, BLK, and JPM may all be forthright about the SLV. However, given the purported industry practices and the various recent scandals for which practically no one has been prosecuted I think the banks have only themselves to blame for people's skepticism.
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PEhrlich
24 Apr. 2011, 4:15 PM
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Devin, you are correct that I set up a straw man by putting words in your mouth. I apologize.
I do think it is unfair to imply that denial is evidence of wrongdoing. For at least the last 6 months, half of all articles on silver published on one of the internets most popular websites have accused iShares of running a scam. It was entirely appropriate for them to respond.
I stand by my statement that the publication of the bar list makes your allegations seem very unlikely. If iShares were to use completely fictitious serial numbers, it would be readily detected by the refiners, who would have a strong interest in revealing the fraud because the price of silver would then skyrocket. If they used serial numbers of bars belonging to others, it would be transparent to the actual owners of those bars, who would also be strongly incentived to reveal the fraud.
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billydgarrett
24 Apr. 2011, 9:17 AM
Comments (182)
i wrote the first 'comment' on mr feldman's article and asked essentially the same valid questions you write about. i look forward to seeing if CLEAR ANSWERS are provided.in any event; your central point that an 'official' denial of 'wrongdoing' has been issued; in my mind and i suspect many others,confirms all the points you make as piercingly valid.i traded out of slv some weeks ago into the mining sector.......i sleep easier.no question that the confirmed millions of ounces silver reserves of axu are just waiting to be refined into the 'real thing'these 'paper funds' are teetering/historic events are pending.believe it!
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pdtor
24 Apr. 2011, 8:58 AM
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Thank you for a well written document that confirms my suspicions about SLV...............and that goes for GLD as well. These vehicles are for speculation not for holding and investing. More obfuscation by Wall Greed.
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Ry The Kid
25 Feb. 2013, 9:42 AM
Comments (257)
I know I am late reading this article, but I want to sincerely thank you for writing this. This information is hard to come by if you are an investor, and you have helped me answer some very important questions I had. I will use this information to benefit my family in a discrete way, that is a blindspot for the tax man.
Does iShares SLV ETF Really Hold Silver?
Apr. 24, 2011 7:00 AM ETiShares Silver Trust ETF (SLV)52 Comments
Hobbes Investment Research profile picture.
Hobbes Investment Research
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Value, Long/Short Equity, Long-Term Horizon, Medium-Term Horizon
Contributor Since 2011
Devin Hobbes is the author of the soon to be updated Dividends: Pros, Cons, Sources, and Strategies.
The iShares Silver Trust (NYSEARCA:SLV) has been the subject of controversy since it first started trading. The objective of the exchange traded fund, according to the iShares website:
Is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.
That is, there's supposed to be a vault somewhere with a bunch of physical silver and each share of the SLV is supposed to represent about an ounce.
Three main parties are responsible for the SLV. The sponsor, iShares, is a subsidiary of BlackRock (NYSE:BLK). It arranged for the creation of the trust and its listing on the NYSE Arca. It assumes certain marketing and administrative expenses of the trust.
The trustee is Bank of New York Mellon (NYSE:BK). It is responsible for the day to day administration of the trust, including processing orders, coordinating with the custodian, calculating the net asset value of the trust, and selling the trust's silver to pay for expenses.
The custodian is JPMorgan Chase (NYSE:JPM). It is responsible for holding the trust's physical silver in its vaults. The prospectus states that JPM:
Is responsible to the trustee [Bank of New York] only. Because the holders of iShares are not parties to the custodian agreement, their claims against the custodian may be limited.
Interesting.
The controversy is whether there is a vault that actually contains the amount of silver iShares says it does. Mainstream media hasn't weighed in on one side or another, but the blogosphere and Youtube are full of various accusations and speculation.
An interesting thing happened a day or so ago. According to Zero Hedge, Kevin Feldman, managing director of iShares, issued a refutation of the rumors that the SLV contains no physical silver.
This reminds me of the CEOs of Bear Stearns and Lehman Brothers saying everything is fine shortly before their banks collapsed. It's also reminiscent of the other Wall Street CEOs saying everything was great and they didn't need to borrow any money while they were borrowing billions and teetering on the edge of insolvency. It also brings to mind the often quoted phrase, "never believe anything until it's been officially denied."
People are suspicious of the SLV for a number of reasons. Here are two.
First, there is a silver shortage. Eric Sprott, who runs, among other things, a physical silver fund (NYSEARCA:PSLV), has commented often in the recent past on how hard it is to buy physical silver in large amounts. Various mints, including the US Mint, are also unable to get sufficient supplies.
Second, the silver shortage has caused premiums for the physical metal to skyrocket. Sprott's fund has traded in recent days at about a 20% premium to the spot price. Silver coins at shops like the American Precious Metals exchange sell for a premium of over 9%.
Add these two together and it seems really weird that the SLV can increase and reduce its silver holdings daily seemingly with no trouble. For example, they decreased their holdings by 33 metric tons on Thursday.
All the data is available on the iShares website in the left hand column. Here is a chart of the trust's silver holdings since the start of April (click to enlarge):
How is it possible for the SLV to buy and sell such large quantities of silver on a daily basis when no one else, it seems, can do so? It's expensive to procure physical silver, and usually takes much longer than a day. Transportation costs would presumably also present a problem.
According to the Inspection of Silver Bullion document on the SLV website (dated July 2010), there are two vaults operated by JPM, two vaults operated by Brinks Global Services, and one vault operated by Via Mat International. That makes five vaults in total with subcustodians operating three. What comes to mind is guys with forklifts moving bullion from one part of a warehouse to another, into the account of another silver market participant. So, for example, when the SLV dumped 33 metric tons of silver the other day, guys on forklifts in one or more warehouses moved the silver from Bank of New York Mellon's account to the accounts of whoever bought it.
The portion of the SLV prospectus that deals with the custodian seems to suggest that this is what takes place. (I say seems because I read it a number of times and am still not quite sure I understand it. It's among the more convoluted things I've read in my life, and I'm a law school graduate. I doubt that the obfuscation in the prospectus is accidental.)
But another question arises. How are buyers and sellers so readily available daily? Buyers at the moment are not a problem, given that there is a shortage. Sellers, on the other hand, are presumably hard to come by. (Maybe the custodian deposits the silver into its own accounts and then sells it back to the trust? I'd like to know.)
Moreover, can the prospectus and inspection certificate be trusted? Banks are not generally regarded as the most honest businesses, as one scandal after another has shown.
Banks have a particularly sordid history with silver. Here are a couple of recent examples.
There's currently a class action lawsuit against UBS that alleges the bank sold investors phantom silver. The plaintiff alleges that he bought silver bars from UBS, paying the bank monthly storage fees. After a while he decided to store the bars himself and demanded delivery of the metal. UBS didn't comply. After a series of ever more frustrating queries, plaintiff finally learned that UBS never purchased silver bars for him. The bank eventually responded, in a purposefully confusing letter, that he would have to sell his current "unallocated position" and buy "a silver position," at additional expense. So the plaintiff paid storage fees for no reason at all. And all that time the bank had apparently led him to believe that he had "a silver position," that is, specific silver bars segregated for him in a vault.
In 2007, Morgan Stanley (NYSE:MS) agreed to pay $4.4 million dollars to settle a suit that alleged a similar scheme. In that case Morgan Stanley claimed that it followed industry practices. It has been suggested that "banks are in the habit of keeping only 1 bar for every hundred that are supposed to be in their vaults." If it's industry practice to make investors believe they're purchasing physical silver when in fact they are not, it is conceivable that the same sort of thing is involved in SLV. Given that JPMorgan, the custodian of the silver in SLV, has been investigated for silver manipulation I would say that more than conceivable, it is likely. How many claims are there on the allocated bars in the five vaults?
So, to summarize, there have been rumors and questions about the SLV's silver holdings. A banker from BlackRock took the time to officially deny these rumors. That's suspicious. The SLV prospectus in its vague language suggests that there is actual physical silver owned by the trust. It also answers, sort of, some of the questions regarding how such vast amounts of silver are bought and sold daily while other market participants have to wait weeks and months for delivery. But bankers have historically not been very honest people in general and their recent activities with silver do nothing to assuage people's suspicions.
Since BlackRock's official denial will most likely backfire, instead of directing investors to the prospectus, Mr. Feldman should answer some of the more practical questions that people have in simple language.
Disclosure: Long physical silver.
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magichr
26 Aug. 2012, 11:18 AM
Comments (1.61K)
I trust slv over going to some store and supposedly buying real silver. But if buy it at a store they over price it by 10% and if you sell it back they give you a price under 10% so it a 20% loss. Thats the real robbery. But at least its in a vault and you just pay whatever the stock price is of it and you can sell it at the stock price. The point is its backed by some big banks. Thats the key. Its been around for 6 years anyone who believe that conspiracy theory stuff needs to find a new hobby. Your stocks are fine but if you got a store your just dealing with some guy who can be selling you fake gold or silver. Id rather trust a big bank them some guy who owns a hole in the wall gold shop. They been getting caught on so many scams especially using tungsten metal to pass as real precious metal. Its funny a ton of people bought a bunch of fake metals and don't even know it yet.
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Econo
23 Apr. 2012, 5:24 PM
Comments (25)
People investing in SLV know that there's no silver. But it's a Keno kind of investment which I sometimes also play.
Why do people play in online casino's? Same thing, different interface.
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Amateur__investor
30 Apr. 2011, 8:45 AM
Comments (759)
I don't believe these etf's actually have the silver bars and ingots at all.They can't print the serial numbers because they don't exist. What is needed is an independent outside source, verified, outside of Wall Street that can attain to the true existence of vaults where these assets are held. Wall Street is not to be trusted. Too many Madoff's in the works. There is way too much silver being bought and sold every day to account for these daily movements. I am a coin collector and I prefer tho have the silver coins in my collection than to take a chance on a ponzi scheme that these people are running.
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PEhrlich
30 Apr. 2011, 10:26 AM
Comments (1.70K)
The serial numbers have been posted on the SLV website.
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L'wood
29 Apr. 2011, 7:33 PM
Comments (25)
Take a look at CEF, Central Fund of Canada. It is actually selling at a discount - 45% gold and 55% silver. The PMs are stored in vaults in Canada and independently audited every six months. This is a stable company selling at a discount to NAV. Personally, I would never buy GLD or SLV. Sprott silver is promoted nicely, but really, a 20% premium.
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The Reader
26 Apr. 2011, 1:47 AM
Marketplace
Comments (282)
Sold all of my SLV shares today. One third of my silver holdings. Price going too high, to fast. Something will give. Secondly, JPM as the custodian? No thank you. I realize that JPM inherited from Barclays, however like GS selling derivatives to their customers and shorting them elsewhere or George Soros telling people that Gold was overbought while all the while buying more...
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Mark Anthony
25 Apr. 2011, 5:53 PM
Comments (3.59K)
This web site, I don't know who created it, tracks the week by week change in the SLV silver bars list:
about.ag/slv/
Very interesting to look at it week by week.
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Mark Anthony
25 Apr. 2011, 5:20 PM
Comments (3.59K)
I am sending email inquiring Henan Yuguang Gold-Lead Co. to verify if they had minted the kind of "Henan Yuguang" silver bars as listed on SLV's list.
I think they are highly suspicious. Legitimate "Henan Yuguang" silver bars have 11 digits serial numbers: 4 digits year plus 7 digits number.
More over, the refinery produced only 600 tons of silver per year, in ALL forms of silver. Only a small fraction would have been minted into 1000 ounces bars. Even a much smaller portion would have been exported out of China.
SLV is claiming much more "Henan Yuguang" silver bars in its list, that it could have reasonably acquired from the company. More over, none of the serial number matches the 4+7 digits format.
Will keep you guys updated if I get a response.
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Silversimon
25 Apr. 2011, 1:41 AM
Comments (2)
How JPM could cover it's massive short if there is mostly real silver in SLV:
1/ Quietly discredit SLV causing a massive run on the shares.
2/ Buy the shares for next to nothing.
3/ Liquidate the fund and take the silver.
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Silversimon
25 Apr. 2011, 1:32 AM
Comments (2)
What if SLV is mostly backed by physical silver and JPM discredits it on purpose, the shares crash and JPM buys the shares for peanuts and covers it's massive short?
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Independent1
24 Apr. 2011, 11:57 PM
Comments (16)
Kids, calm down. If you don't trust JPM, BLK or paper, don't buy SLV...simple as that...I'm sure they don't have all the silver they claim to, but I suspect that they have contracts, certificates, and various other bits of paper stating that the silver is on the way. And then they have bars too. Not much comfort when the shite hits the fan, but then SLV wasn't going to help much with that, now was it?
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alpha_zeta
24 Apr. 2011, 9:44 PM
Comments (126)
How about they (JPM , Blackrock ,ishares, custodian) list the serial number for each bar of silver held or disposed of in the Trust ?
Some other Trusts, for example, Claymore do so list the serial numbers.
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drini1
24 Apr. 2011, 9:02 PM
Comments (9)
All the SLV holder want it to higer but I see a bubble here its gone up 180% 10 months about 50% in 1month which is unrealistic. SLV does not have to be backed up by physical metal. It has to track the price and hold some silver, not sure which day but the bankers are going to crash this baby very soon by Wed when April contracts are setttled. So buyers should be very careful here and for shorts I think they need to stay out now and wait for the big guys like GS, JPM, CITI do they part to kill this and will happen these guys have unlimit control of the price and if they are short as it appears to be the case here the the longs are in for a big loss.
Also these guys are likely selling the physical metal at a large profit and at the same time shorting the ETF and futures and we will know this very soon. This has always been the case not sure why it not the same this time. I would not bet against these guys they have unlimited access to money and info.
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ZiggyK
24 Apr. 2011, 7:36 PM
Comments (42)
Sounds like a conspiracy made to make SLV go down in price so somebody doesn't have to cover their calls or lose money because they didn't already do it. Seeing how large investors often sell or buy alot of shares right near the expiration of options so they can manipulate the prices in their favor, it wouldn't surprise me that the same guys are starting up conspiracy theories for the same purpose. I'll be selling my SLV shares once it hits $49-50 but not because of any conspiracy theory. It will be because silver will be hitting a high point that may pose a correction and I will have made enough profit so as to feel that I do not have to be greedy and risk seeing my profits get lost if the correction does begin.
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manushi
24 Apr. 2011, 4:26 PM
Comments (21)
It does seem odd that you, Mr. Hobbs would trust Eric Sprott,
a private businessman, in the silver game just for his own gain,
yelping about supply delays to justify
20% premium on shares of his private enterprise, PSLV.
Coins always carry a premium for the minting and ease
of handling, it's a given, still not a 20% premium!
I would say the Sprotts are just greedy , which is perfectly
legitimate, blaming supply problems to hide it, and you fell for it.
Mr. Feldman of SLV is doing his job by coming out openly
and addressing the issue in a fast and direct manner.
This was an excellent move , no hiding behind PR offices
etc. and I wish more executive would do the same more often.
Using this against SLV had anecdotal / infantile traits to it.
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The Reader
24 Apr. 2011, 3:23 PM
Marketplace
Comments (282)
If you are not comfortable then sell your shares and purchase SIVR or something else. I am not an expert in document color, serial numbers and third party vaults. Frankly I do not trust a Bank that has been significantly shorting a specific commodity for some time to be the "keeper of the gate" of the same commodity that I want to own shares in. Read over the weekend that several large Dealers are currently "out of stock" of American Silver Eagles. The price is rising and it is getting very interesting.
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Mike Merrill
24 Apr. 2011, 10:59 PM
Comments (552)
Excellent point, Reader. The fundamental conflict of interest is what creates the problem to begin with. If you want to be the custodian, you can't also bet against it. Could Blackrock fire JPM as the custodian and hire someone else?
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Mark Anthony
24 Apr. 2011, 2:42 PM
Comments (3.59K)
SLV publishes a silver bars serial number list, and a presumed audit certificate by Inspectorate International. Both documents raised suspicion of fraud if you scrutinize them. Read here:
seekingalpha.com/artic...
and here:
seekingalpha.com/insta...
Although some one claimed to represent Inspectorate emailed me and claimed that the audit report was legitimate it does NOT remove my suspicion. I find a further suspicion that on the first and second page of the audit report, the LOGO has different colors. One is much lighter and another is much darker. These do NOT appear to be original Inspectorate stationery paper sheets.
us.ishares.com/content...
The silver bars list are more questionable. They have all the silver bars in contiguous sequential numbers, often times begins from bar No. 1. That is statistically impossible.
Now, here is one new point I am making: The vast majority of silver produced are industry silver and they are usually made into the form of powder, foam, or grains of silver called silver shots. Silver in such form are much easier for industry users to use them.
Only a very small percentage of the world's silver production is made into silver bars, even less is made into silver bullion bars. Among which, even less are made into the 1000 ounces bars.
However, EACH and EVERY silver bar that SLV claims to hold, are 1000 ounce silver bars. Every single one. There is no exception. There is no 100 ounce bars or 1 kilogram bars. Every single one they have are in 1000 ounce bars.
How could that be possible? They probably hold more 1000 ounce silver bars than all the 1000 bars the world had ever produced!
And yet they hold not a silve bar which is not 1000 ounces.
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PEhrlich
24 Apr. 2011, 7:57 PM
Comments (1.70K)
Mark, I think you're failing to take into account that iShares currently holds nearly 50% of the world's above ground silver. They don't walk into Jim-Bob's coin shop and buy silver bars retail. The only practical way to operate on this scale is to have longstanding contracts directly with the refiners, who are going to give them the bars with sequential serial numbers and in whatever size they request.
The variability in month to month demand for silver by SLV is fairly modest. Getting the silver delivered when they need it directly from the refiner should not be a problem with a long term contract.
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Mark Anthony
25 Apr. 2011, 1:39 AM
Comments (3.59K)
That is nonsense. SLV is not supposed to be an active silver hoarder/investor itself. It is an ETF which means it is market neutral: If more investors buy SLV shares then selling, then SLV bids for physical silver in the spot market, if more investors are selling than buying SLV shares, then SLV is supposed to sell silver into spot market. It operates in the spot market, based on investor sentiments.
SLV does NOT go all the way reaching out to silver refineries asking them to mint silver bars to specific specification. Just like SLV does not go all the way of trucking a whole load of silver bars delivered to refineries and ask them to melt them down.
SLV only reach as far as the spot market. Whatever is available in the spot market, is whatever SLV will buy or sell. At least that is how it should operate in principle.
So it is suspicious how could SLV have such a complete collection of virtually any silver bar you can think of, with successive sequential bar serial numbers, some start with No. 1
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BrookfieldG
24 Apr. 2011, 2:21 PM
Comments (159)
Although it will never satisfy the conspiracy theorists and doomsday scenario PM-bugs, can we see a physical audit of the amount of metal in the vaults free of other claims verified by an appropriate firm letting the analysts do the math on how close that comes to the shares on the market.? I will accept the CEO's signature regarding "free of other claims" as adequate.
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searcher
24 Apr. 2011, 1:56 PM
Comments (1.68K)
After comment of Apr 24 01:16 PM regarding published serial numbers and denials and/or lack of same etc., it's apparent that much of the commentary resembles that of a "Who's on first" routine. You cannot use logic to address these suspicions. The surreal circumstances and multiplying conspirators will emerge to support the fantasy as the situation demands. After a specific issue is addressed, if inconveniently secure, it will be blithely ignored.
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Drewskers
24 Apr. 2011, 1:47 PM
Comments (55)
"it seems really weird that the SLV can increase and reduce its silver holdings daily seemingly with no trouble"
It would seem really weird if you had even the vaguest comprehension of how an ETF works.
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Hobbes Investment Research
24 Apr. 2011, 2:54 PM
Comments (14)
Then enlighten me. How does the custodian load and unload physical silver daily?
April 20, SLV increases its silver holdings by 67 metric tons. April 21, SLV decreases its holdings by 33.39 metric tons. On April 20, where did the 67 metric tons come from? On April 21, where did the 33.39 metric tons go?
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(4)
Amateur__investor
24 Apr. 2011, 1:32 PM
Comments (759)
Totally agree. i don't believe they have the actual silver. This is another con job by Wall Street. I will never invest with them. If people are smart, they will abstain also. remember Lehman Bros. and AIG
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(1)
Michael_Smith
24 Apr. 2011, 1:16 PM
Comments (6)
they might have some, but certainly not enough to cover all the paper they have printed.
would get out of SLV or any paper backed ETF - it has to be Physical.
PSLV is the way to go - the 20%+ premium will only rise as people discover SLV vaults are empty.
If SLV has the physical to back up its paper - why not release the serial #s of the physical Silver it has in its vaults ???
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Hobbes Investment Research
24 Apr. 2011, 2:13 PM
Comments (14)
>If SLV has the physical to back up its paper - why not release the serial #s of the physical Silver it has in its vaults ???
These are in fact released and updated regularly:
ebts.jpmorgan.com/meta... (Note that this is a 13mb file with over 5,600 pages). You may also find useful the analysis here: about.ag/slv/#info
This bar list by itself, though, does not answer the questions that I pose in the article.
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(3)
Mike Merrill
24 Apr. 2011, 10:55 PM
Comments (552)
As an investor who owns shares in SLV, all the doubts and consipiracy theories are cause for concern. Would the simple solution be for Blackrock to require JP Morgan to submit to an outside audit?
As SilverMeister pointed out, there is also the question of whether the silver physically present is leased, borrowed, or hedged against other positions. An audit would address that- assuming that it was done by a reliable third party (if there is such a thing anymore). It seems like it would be in Blackrock's best interest to make sure their custodian (JPM) isn't dealing off the bottom of the deck. Otherwise, Blackrock would be on the hook.
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PEhrlich
24 Apr. 2011, 12:18 PM
Comments (1.70K)
Given the quantity of silver claimed to be physically present in the iShares vault, there would have to be scores if not hundreds of counterparties. Each of which would be in a position to blackmail a $38B company.
The number of co-conspirators who have to be kept in line seems too high for these to be realistic possibilities.
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SilverMeister
24 Apr. 2011, 12:07 PM
Comments (1)
Whether or not the silver is actually there only constitutes one point of inquiry. The other (which not enough people focus on) is centered around whether it is unencumbered. ie. Is it leased, borrowed, hedged against other positions, multiple claims against it etc. ? Who knows...?
IMO, there is a disturbing lack of transparency & clarity involved here. And the questionable legalese of the prospectus only amplifies the concerns.
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mdw70
24 Apr. 2011, 11:51 AM
Comments (60)
Maybe they consider a "vault" a mining shaft. They get the silver and you get the shaft......
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rash91
24 Apr. 2011, 11:09 AM
Comments (1)
After all the corruption the banking industry has committed, who would risk having anything to do with banking on most levels except to hold their bullion in a rental box or some weekly check writing for expenses?
Seriously now, didn't you learn anything?
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Conventional Wisdumb
24 Apr. 2011, 10:54 AM
Comments (1.80K)
If you think SLV is a fraud then the price of silver is either artificially high or low. This poses an interesting paradox. The lack of available supply resulting from a fraud would imply that prices are being suppressed. However, the flipside is that the demand from the buyers of the SLV might be a major force in raising the price as well, which could result in a collapse of the price if a Madoff style scam was revealed and buyer sentiment soured worldwide.
I am entirely agnostic on the issue but it is interesting. You would create a pretty impressive publishing sub-industry if this turned out to be true :)
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Michael_Smith
24 Apr. 2011, 1:24 PM
Comments (6)
interesting points.
I feel JP Morgan is quietly going about acquiring the physical silver it needs to back up SLV - which in turn is also driving the price way up.
Its the only way for JP Morgan to come out of this alive - their days of shorting are over, and the true price of Silver will soon enough be realized - $100 + per ounce.
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highlarche
24 Apr. 2011, 10:51 AM
Comments (163)
I like SIVR and CEF
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AllStreets
24 Apr. 2011, 10:38 AM
Comments (2.04K)
I once read most of the prospectus and also read a number of articles discussing this question. I'm not going to research this again now, but my recollection is that there are cerain authorized market makers apart from the custodians and subcustodians who may redeem SLV's for physial silver (and vice versa) in a minimum quantity much larger than any typical retail investor would. If that's the case then the larger ebbs and flows of physical silver held by the SLV trust could be accounted for by those dealers' activities. Such dealers wouldn't necessarily be interested in selling physical silver to the public, and, in fact, might merely be acting in behalf of their clients who were holding large positions in SLV who also don't intend to sell the physical to end users or other retail buyers. Anybody know if this is possible?
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JD59
24 Apr. 2011, 10:18 AM
Comments (83)
SLV has no silver is their vault IMO! I can't verify it, but IMO it is a SUPER FRAUD! If JP Morgan is involved then I suspect their is fraud!
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PEhrlich
24 Apr. 2011, 10:28 AM
Comments (1.70K)
I guess the question I would ask is what you would accept as "prooof" that the silver is actually there.
They have the serial numbers of the bars on their website, which shows bars from about 20 different refiners. If any fictitious bars were added to the list, any one of these refiners could blow iShares out of the water by pointing out that they never sold iShares a bar with that serial number. Assuming each of these companies has 20 employees who have access to the list of bars actually sold to iShares, we just added another 400 people to the list of necessary co-conspirators.
Judging from many of the comments I see on this subject, I suspect that for many of the commenters on SA there is no level of proof that would be acceptable, because the suspicion is ideologically driven.
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winstonc
24 Apr. 2011, 10:44 AM
Comments (214)
Your comment supposes that refiners keep track of where their bars go after they have been sold for the first time from the refinery. They don't.
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PEhrlich
24 Apr. 2011, 10:59 AM
Comments (1.70K)
I was thinking of fictitious bars (serial numbers) rather than claiming to own real bars owned by others, but I address your point below.
Your point is a good one, but it only increases the size of the list of necessary co-conspirators. iShares would not be able to track where these bars went either. Every owner of physical silver in the world can look at the iShares inventory list, and could drop a dime to the WSJ if they found any matches between the iShares claimed inventory and bars in their own possession.
I would urge all the skeptics on this board to do just that. Get out your list of bar serial numbers and check them against the iShares list.
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PEhrlich
24 Apr. 2011, 11:21 AM
Comments (1.70K)
I'll add to this comment that the list of bar serial numbers on the iShares website represents almost 50% of the CPM group's estimate of total above ground silver. (CPM group is the consulting firm that generates all the silver supply and utilization data on the Silver Institute website). So if even 10% of the serial numbers listed correspond to silver owned by others, the falsely claimed serial numbers should correspond to at least 5% of all bars in existence. If none of the commenters on this article can identify a bar in their possession that is on the list, the author's thesis begins to look unsupportable.
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Hobbes Investment Research
24 Apr. 2011, 1:31 PM
Comments (14)
That is a great question. Everything can be faked. At some point, whether it is reading the prospectus, actually visiting the vault, or something in between, one must simply trust that what one is being told is true.
What I'd like to see is more transparency. I'd like to know, exactly and in simple language, how silver is delivered into the trust's account and how it is sold. What actually happens in these vaults on a daily basis? To whom is the silver sold? From whom is it bought? How many parties have a right to this silver?
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Mark Anthony
24 Apr. 2011, 3:11 PM
Comments (3.59K)
You said: "If none of the commenters on this article can identify a bar in their possession that is on the list, the author's thesis begins to look unsupportable."
Your logic is invalid. Most likely the silver bars listed in SLV's list are simply fictitious and no silver bar with the listed serial numebr ever existed, whether in SLV's possession or in any one's.
For example. Any silver bar produced by the Great Wall Refinery in China should have a 7 digit serial number, as shown in the picture below. But even though they listed hundreds of thousands of Great Wall silver bars, NONE of the Great Wall brand silver bar listed in SLV's list contain a seven digit serial number, not even one piece:
cdccgold.scol.com.cn/c...
Go exam their (SLV) silver bars list yourself.
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PEhrlich
24 Apr. 2011, 7:44 PM
Comments (1.70K)
Mark, I'll offer two responses here.
First, there's no way they would ever get away with (or risk, remember that this is a $32B company) publishing a list of fake numbers, whether they are fictitious numbers or numbers from someone else's bars. Either way there are people out there who could make millions if not billions by exposing the fraud. The refining companies are going to recognize immediately if fictitious serial numbers are in the list, and a simple call to the WSJ pushes the value of their silver holdings up three fold.
The fact that the bar seen in a picture on a website appears to have 7 digits (I can't read what's on the far side of the bar), doesn't mean that they all have seven digits. And it would fall well within human nature for someone cataloging hundreds of thousands of bars to leave off the first 3 digits if they were all the same. This sounds to me much more like the type of thing that would occur in a manual inventory process than a computer driven generation of fake numbers.
I think the bottom line is that if they gave you a personal tour of the vault, you would claim that they were showing you silver plated lead. If they let you assay the bars, you would claim that the rented the silver for the purpose of the tour and swept it away as soon as you left. And if they let you live in the vault, you'd claim that they went out and bought all the silver for the first time the day before you moved in.
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Margret
30 Apr. 2011, 3:11 AM
Comments (22)
"First, there's no way they would ever get away with (or risk, remember that this is a $32B company)"
How big was Enron before it collapsed? :)
Or any one of the other big banks that have failed in the past.
I'm not saying it's one way or the other, but when commodities including silver are commonly traded with 100 to 1 ratio of physical, and banks selling unallocated silver to individual customers, and common practice for banks to store only a single bar for every 100 paper sold, it's not surprising that there are rumors the same is happening with ETFs.
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PEhrlich
30 Apr. 2011, 4:13 AM
Comments (1.70K)
True enough, but if they don't actually hold the bars, how would it be in their interests to publish a list of fake serial numbers? Doing so makes exposure more likely not less.
Not only would any of the two dozen or so refiners in the list be able to expose the whole scam, they would have signficant motivation to do so. The price of their silver holdings would go up, and there would be potential liability issues if they did not.
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PEhrlich
24 Apr. 2011, 9:50 AM
Comments (1.70K)
" A banker from BlackRock took the time to officially deny these rumors. That's suspicious."
What exactly do you expect Blackrock to do in this situation? If they remained silent, this article would have almost certainly contained the accusatory statement that "No one from Blackrock has denied these rumors".
Welcome to 1984. Denial is evidence of guilt. As is failure to deny.
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Hobbes Investment Research
24 Apr. 2011, 1:11 PM
Comments (14)
>What exactly do you expect Blackrock to do in this situation?
What exactly is the situation? What happened that BLK decided to issue a denial? Except for the fund growing in asset value and having a steadily higher trading volume nothing appears to have changed either in the last three years that BLK has owned iShares or during the two years before that when the SLV was sponsored by Barclays. No one in the mainstream media, to my knowledge, has expressed skepticism about SLV's holdings. The accusations from the blogs, forums, and Youtube have been the same for the last five years.
It is suspicious that now, all of the sudden, these rumors are being addressed. The reason for the change may be benign, but how can it not be suspicious given the events of the last decade?
>If they remained silent, this article would have almost certainly contained the accusatory statement that "No one from Blackrock has denied these rumors".
Actually, I wouldn't have written anything. The impetus of the post was Feldman's denial.
Nevertheless, you make a valid point that the banks find themselves in a kind of catch 22. BK, BLK, and JPM may all be forthright about the SLV. However, given the purported industry practices and the various recent scandals for which practically no one has been prosecuted I think the banks have only themselves to blame for people's skepticism.
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PEhrlich
24 Apr. 2011, 4:15 PM
Comments (1.70K)
Devin, you are correct that I set up a straw man by putting words in your mouth. I apologize.
I do think it is unfair to imply that denial is evidence of wrongdoing. For at least the last 6 months, half of all articles on silver published on one of the internets most popular websites have accused iShares of running a scam. It was entirely appropriate for them to respond.
I stand by my statement that the publication of the bar list makes your allegations seem very unlikely. If iShares were to use completely fictitious serial numbers, it would be readily detected by the refiners, who would have a strong interest in revealing the fraud because the price of silver would then skyrocket. If they used serial numbers of bars belonging to others, it would be transparent to the actual owners of those bars, who would also be strongly incentived to reveal the fraud.
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billydgarrett
24 Apr. 2011, 9:17 AM
Comments (182)
i wrote the first 'comment' on mr feldman's article and asked essentially the same valid questions you write about. i look forward to seeing if CLEAR ANSWERS are provided.in any event; your central point that an 'official' denial of 'wrongdoing' has been issued; in my mind and i suspect many others,confirms all the points you make as piercingly valid.i traded out of slv some weeks ago into the mining sector.......i sleep easier.no question that the confirmed millions of ounces silver reserves of axu are just waiting to be refined into the 'real thing'these 'paper funds' are teetering/historic events are pending.believe it!
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pdtor
24 Apr. 2011, 8:58 AM
Comments (1.98K)
Thank you for a well written document that confirms my suspicions about SLV...............and that goes for GLD as well. These vehicles are for speculation not for holding and investing. More obfuscation by Wall Greed.
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Ry The Kid
25 Feb. 2013, 9:42 AM
Comments (257)
I know I am late reading this article, but I want to sincerely thank you for writing this. This information is hard to come by if you are an investor, and you have helped me answer some very important questions I had. I will use this information to benefit my family in a discrete way, that is a blindspot for the tax man.
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