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BlackRock Issues Refutation Of SLV Fraud Allegations; Is It Time To Panic For SLV Holders?
That over the past few years there has been a substantial push to expose some of the chicanery at the SLV iShares silver ETF, especially among the non-indoctrinated blogosphere, is no surprise. After all fear of a massive paper silver wipe out is not only the reason for success of Eric Sprott's physical silver ETF, but for the massive and consistently record premium over NAV of the PSLV. Yet up until now, we were not all that concerned about such allegations (despite having written about this ourselves on several occasions). After all, the one thing that would essentially validate such, at time exorbitant, allegations, was missing: a formal refutation. That is, until now. Kevin Feldman, a Managing Director in the iShares unit of BlackRock, has just blasted out the following email which we were lucky enough to become privy to. Basically, we now have the one and only thing we were missing: an official denial of all the "rumors." It may now be time to abandon the SS SLV, because if this letter is the best defense iShares can muster, then SLV holders may be in trouble. But better confirmation than. And leaving the content of the letter aside, its existence, and that BlackRock itself is willing to engage the tinfoil hat clad blogosphere, is the biggest red flag so far...
What’s in the iShares Silver ETF? Silver.
By Kevin Feldman
Leased silver? Derivatives? Phantom silver?
No, no and no.
I’ve seen a lot of comments like the one following this Seeking Alpha post, speculating on the various ways that iShares Silver Trust (SLV) investors could find themselves holding something other than the silver bullion they’d expect.
Every investor interested in buying SLV should first read its prospectus, particularly the Risk Factors section on pages 7-11. You will see the risks involved with an investment in SLV, including the potential for losses and liquidity risks.
What you won’t see are risk factors around SLV holding derivatives, i.e. silver futures, BlackRock or the trust custodian leasing SLV’s silver(the trustee is authorized to sell silver in the smallest amounts required in order to pay expenses), or SLV not holding sufficient silver to correspond to all shares outstanding, all of which SLV is not permitted to do under its prospectus or current legal structure.
At BlackRock, we take the responsibility of protecting shareholder interests very seriously and spend a lot of time constructing our iShares products to help ensure they meet investor expectations. In the case of SLV there are multiple safeguards in place. For one, it’s structured as a grantor trust, which means the trust (on behalf of its shareholders) has the legal right of ownership to the silver it holds. JPMorgan Chase Bank, N.A., London branch, provides custodial services for storing the silver, but has no legal rights to SLV’s silver holdings. Investors can see the serial numbers of all the silver bars in the trust here and can review an independent audit of the trust’s silver here. (See chart showing total shares outstanding vs. total ounces of silver in the trust below).
Source: BlackRock 4/28/06 (launch date) – 4/1/2011
Another concern revolves around ETF creation and redemption. I’ve gathered from many posts and comments that there is a misunderstanding about the role of Authorized Participants who facilitate trading in SLV through the creation of new shares when demand is high. Creating new shares does not expose existing SLV shareholders to some new mysterious risk. During the creation process, the AP exchanges physical silver for new shares, which are issued by Bank of New York Mellon (SLV’s trustee) on behalf of BlackRock Asset Management International Inc. (the trust’s sponsor). SLV’s trustee and custodian ensure proper receipt of the silver before new SLV shares are released.
I recognize we live in a skeptical time, especially following the events of 2008, and it’s smart to question whether your investments are doing what you think they should be doing. One of our key tenets here at iShares is transparency, which means we make every effort to educate potential investors on how each ETF works and what it holds. In the case of SLV, it’s a very straightforward answer: silver.
iShares Silver Trust (the “Silver Trust”) has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus and other documents the Silver Trust has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting www.iShares.com or EDGAR on the SEC website at www.sec.gov. Alternatively, the Silver Trust will arrange to send you the prospectus if you request it by calling toll-free 1-800-474-2737.
Investing involves risk, including possible loss of principal. The iShares Silver Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Silver Trust are not subject to the same regulatory requirements as mutual funds. Because shares of the iShares Silver Trust are expected to reflect the price of the silver held by the Silver Trust, the market price of the shares will be as unpredictable as the price of silver has historically been. Additionally, shares of the Silver Trust are bought and sold at market price (not NAV). Brokerage commissions will reduce returns.
Shares of the Silver Trust are created to reflect, at any given time, the market price of silver owned by the trust at that time less the trust’s expenses and liabilities. The price received upon the sale of shares of the Silver Trust, which trade at market price, may be more or less than the value of the silver represented by them. If an investor sells the shares at a time when no active market for them exists, such lack of an active market will most likely adversely affect the price received for the shares. For a more complete discussion of risk factors relative to the Silver Trust, carefully read the prospectus.
Following an investment in the iShares Silver Trust, several factors may have the effect of causing a decline in the prices of silver and a corresponding decline in the price of the shares. Among them: (i) A change in economic conditions, such as a recession, can adversely affect the price of silver. Silver is used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the shares. (ii) A significant change in the attitude of speculators and investors towards silver. Should the speculative community take a negative view towards silver, a decline in world silver prices could occur, negatively impacting the price of the shares. (iii) A significant increase in silver price hedging activity by silver producers. Traditionally, silver producers have not hedged to the same extent as other producers of precious metals (gold, for example) do. Should there be an increase in the level of hedge activity of silver producing companies, it could cause a decline in world silver prices, adversely affecting the price of the shares.
The amount of silver represented by shares of the iShares Silver Trust will decrease over the life of the trust due to sales necessary to pay the sponsor’s fee and trust expenses. Without increase in the price of silver sufficient to compensate for that decrease, the price of the shares will also decline, and investors will lose money on their investment. The Silver Trust will have limited duration. The liquidation of the trust may occur at a time when the disposition of the trust’s silver will result in losses to investors.
Although market makers will generally take advantage of differences between the NAV and the trading price of Silver Trust shares through arbitrage opportunities, there is no guarantee that they will do so. There is no guarantee an active trading market for the shares, which may result in losses on your investment at the time of disposition of your shares. The value of the shares of the Silver Trust will be adversely affected if silver owned by the trust is lost or damaged in circumstances in which the Silver Trust is not in a position to recover the corresponding loss. The Silver Trust is a passive investment vehicle. This means that the value of your shares may be adversely affected by trust losses that, if the trust had been actively managed, might have been possible to avoid.
Shares of the iShares Silver Trust are not deposits or other obligations of or guaranteed by BlackRock, Inc., and its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
BlackRock Asset Management International Inc. (“BAMII”) is the sponsor of the Silver Trust. BlackRock Fund Distribution Company (“BFDC”), a subsidiary of BAMII, assists in the promotion of the Silver Trust. BAMII is an affiliate of BlackRock, Inc.
Although shares of the iShares Silver Trust may be bought or sold on the exchange through any brokerage account, shares are not redeemable except in large aggregated units called Baskets.
When comparing commodities and the iShares Silver Trust, it should be remembered that the sponsor’s fee associated with the Trust is not borne by investors in individual commodities. Buying and selling shares of the iShares Silver Trust will result in brokerage commissions. Because the expenses involved in an investment in physical silver will be dispersed among all holders of shares of the Silver Trust, an investment in the Silver Trust may represent a cost-efficient alternative to investments in silver for investors not otherwise able to participate directly in the market for physical silver.
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High trading volumes would indicate same shares moving multiple times.
This is NEGATIVE as volume increases are associated with tops, not bottoms.
No, what I am saying is that if you stopped the world and took a snapshot, there would be more than 368 million. People buy and hold SLV too.
Incredulous volume associated with finite shares of ETFs is just one more problem the SEC WILL never notice. SLV isn't the only ETF with this problem, it's systemic.
+ 46.60 Bingo you got it same thing happening in spot market lot of volatility especially yesterday at 46.
1) Unless you mean naked shorting, which is illegal, no there most likely are no phantom SLV shares.
2) On a 'big news' day or any sort of 52wk high, its typical for a larger than average volume on the stock. Hell, the whole float can trade, who cares. The same sellers (and in this case HFTs) can churn the same share 100s times over.
3)Not sure what you mean by sold out- perhaps no shares to purchase? Impossible due to the MMs and machines scalping for pennies.
4)OI in options has very little to do with the underlying silver in this case. 2 weeks ago when the news hit that a 100k put order went through it scared people in the pits and started the subsequent SI->SLV->SLV options turn, but no theres no obligation whatsoever to issue shares here.
If you hold a call when options expire, you have the right to buy shares at the strike price. If all shares are spoken for, the ETF is obligated to create more the way I understand it. So say at options expiry, 5,000 option holders take delivery of shares (which don't exist yet). What's SLV going to do? The silver market is so tight, they won't be able to buy the metal without jacking the price.
My suspicion is that the brokers are selling shares more than once. Most people hold under the street name, so it is very much like an unallocated pool.
If you hold a call when options expire, you have the right to buy shares at the strike price. If all shares are spoken for, the ETF is obligated to create more the way I understand it.
I doubt you understand very much. If you hold a call, then someone else sold it. That person is then responsible to deliver the shares. If he owned SLV already, he has to give you his shares. If he wrote the call naked, he either has to run around and buy the shares at market, or you could choose to settle for the cash difference. The options have zero to do with the ETF trustees, unless they're the one selling the calls, which may be possible, but is unlikely, IMHO.
Thanks for the condescending reply.
Now go add up all the call options on the SLV and tell me what percentage of them could possibly be covered, jerk-off. How many shares would be left to trade?
Are you going to try and tell me that the trustee had nothing to do with the decision to allow an ETF that is supposed to be back by physical silver to trade options?
One of us doesn't understand very much, all right.
Now go add up all the call options on the SLV and tell me what percentage of them could possibly be covered, jerk-off.
Who cares? Apparently, you seem to believe that people are buying calls without anyone selling them. Don't you understand why they call it a "trade"? There has to be someone on the other side. Now, he may be naked, but that's his look-out; he has to post margin in that case. If the trade goes against the naked writer, he may be able to settle in cash, or he may have to run around and pay even more to deliver SLV shares but it HAS NOTHING TO DO WITH THE TRUSTEE. Does the owner of a horse have any bearing on the amount of bets placed on that horse running a race?
Your second comment is even less informed. Do you think the exchange had to go to Sergey Brin to get permission for them to create options on GOOG? Or any listed company? The exchanges create options when a stock meets certain criteria and they think there is a market for those options. To them, it's like adding a new product to the catalog, nothing more. If it's a popular contract, the exchange makes money - that's why they create the options in the first place.
Geez, do you even understand the concept of "open interest"?
"Does the owner of a horse have any bearing on the amount of bets placed on that horse running a race?"
Is the seller of a moped, who advertised it for sale in the local paper as a Harley, committing a fraud?
No one expects to go to the owner and be presented with a moped plus five empty flower pots in leiu of the Harley advertised for sale.
All this has been settled long ago...SLV is not silver, just like GLD is not gold...they are both paper ruses who's physical holdings combined may or may not even equal a moped's value as they are all encumbered by the trustees custodian...there is no there there...they have a "claim" on a custodians metal (which, in a bankruptcy, this claim and a dollar bill will get you a cup of coffee)...the trustee (SLV) ain't got shit but it has more than enough paper to wipe with if it can ever find any.
So, writing options on absolutely nothing of value may seem like a fine idea to you but everyone around here pretty much discounts it as a fraud within a fraud...again, the trustee (i-Shares) holds nothing but a claim on silver.
Care to dispute this?
Do I want to dispute this? No. Why should I? It's not related to my original points, which are 1) it's possible to have a much higher open interest on options than there is a float of existing shares, and 2) that options trade without the necessary participation of a company or a trustee.
But I'll take a stab at your last comment about trading options on something worthless. DON'T ANY OF YOU CLOWNS REALIZE AN "OPTION" IS JUST A FRIGGIN' BET?! It might get dressed up seven ways to Sunday, but it's just a bet. You can bet on the outcome of a horse race or the price of silver; neither has anything to do with the result. A bunch of people think the price of silver is going up; there's a bunch of others who think it won't. The options just enable their bets, nothing more, nothing less.
I have no idea if SLV is a fraud or not, and I don't care; I wouldn't buy it in any case. Physical in a good depository at 60 basis points is a much better alternative, IMHO.
"DON'T ANY OF YOU CLOWNS REALIZE AN "OPTION" IS JUST A FRIGGIN' BET?!"
No it's not...a bet has a winner and a loser.
An option is just a right to buy or sell at a certain price...it can expire with no action taken...that ain't a bet.
"I have no idea if SLV is a fraud or not, and I don't care; I wouldn't buy it in any case."
Smart.
"Physical in a good depository at 60 basis points is a much better alternative, IMHO."
Physical outside of your control is of no use to you...IMO.
A bet has a winner and a loser
Really? Ever had the Jets by 3, and they win 27-24? Who's the winner and loser of that bet?
As I said, options are dressed up to seem respectable, but in the end, they are just bets. They have uses - hedging against price declines, generating income from a stock in the doldrums, etc., but at the end of the day, they're a bet. People who don't realize that are going to get fleeced in the big casino.
But you seem at least rational, unlike McDick. I still don't think he understands what a counter-party is, that an options trade has to have two sides, and that selling options has nothing to do with the trustee.
But I'm the clueless one.
"People who don't realize that are going to get fleeced in the big casino."
You will note I carefully passed over the broker/exchange who will make money no matter what ;-)
I think what would be more appropriate is to have the shares which the option is written on placed in escrow...taken out of trading activity...then you couldn't have naked positions, which is like fractional reserve market activity as far as I'm concerned, the issue is the shares themselves (or is supposed to be), not the fiat paper held in margin to offset your "bet" going against you and you never having owned the shares written against in the first place...which I believe to be Hughs larger point and mine.
It's the same with FTD's...changing gears a bit here...I presume the DTCC has just about given up trying to count the fictional electronic shares that have been put into "circulation" on failure to delivers because of naked shorting or naked long for that matter (these are broker instigated)...and legal for some reason.
Frank has no idea if SLV is a fraud or not, but he's sure it's not.
I think you're wasting your time here.
An option IS a bet, just as a long or short on any security is also a bet (or, if you wish, a hedge at the very least).
I dont see how Frank's comments are misinterpreted and all of a sudden talk about no silver in the SLV is brought up. That might indeed be very true, but i believe the original talk was about OI which was answered pretty concisely up above.
iShares has zero responsilbility to issue new shares based on options speculation. Thats all you need to know.
Thinking of options as a some sort of side-bet is incorrect. It's an over-simplification for people who don't want to really understand. Frank was the one who decided he needed to straighten me out, and has now retreated to a third-graders understanding of options.
Selling call options is just like selling silver futures. Like it or not, you are obligated to deliver what you promised (whether it exists or not). The first part of my original statement was that trading volume indicates that to me that more shares of SLV trade than exist. No "real" stock averages more than 9% of it's shares outstanding daily (1 or 2 percent is more like it). Thursday it was over 24%. I'd estimate the number of people who think they own shares of SLV at triple the number of shares outstanding (1.1 Billion).
There is no mechanism in place to ensure that ETFs cannot trade phantom shares - Brokers hold them in street name, sell and cash out to customers - esentially they are unallocated pools, fractionally backed by silver. Physical supply is both finite and tight.
Now add options into the mix....
People obligating themselves to acquire shares of something that doesn't yet exist (SLV shares) The only way to creat new shares is to have silver to give to the trust. Do they have silver? No. Another mechanism nobody bothered to put in place.
The silver story is about the growing scarcity of a natural resouce. All reasonable indications are that the SLV adds to the artificial supply. Phantom shares=phantom silver, that couldn't be acquired.
No different than the bankers writing more notes than the gold their vaults contained.
Im pretty sure youre going to stand by your (unfortunately, misinformed) statement regarding trading volumes, but i just had to add a final response with respect to ADV for a stock.
There is nothing preventing 100% of the float from trading on a single session. Now that silver's ATR over the last few sessions has significantly increased, this is extra incentive for the algo's to scalp those pennies and provide ample liquidity. Its the same shares being churned over and over. How many actual shares are traded? Your guess is as good as mine. High volume happens on earnings days, signifcant company news, and on large gaps. Whats been happening in the silver is basically a gap each morning - all the more reason for silver-tracking funds to go out and re-balance their hedges, thus inflating the volume you see.
I have no argument with your comment that the volume in SLV has exploded, but to blame this on phantom shares is simply disingenouous as you seem to understand other market dynamics fairly well.
I understand the churning (really I do), but I also understand that not everyone is a trader, especially silverbugs. Silver, if you believe in it is a buy and hold kind of deal. If 3% of the transactions in SLV since it debuted were buy and hold, all 368 million shares are owned. There are no shares left to trade.
368 million shares isn't much. If Citigroup can have a float of 29 billion shares, how easy would it be to find homes for 368mm of SLV.
Heinz is about the same size as SLV, Institutions own 65% of it. Info on institutional ownership isn't available on ETFs, but if the same were true of SLV that takes 239mm out of play, leaving only 129mm for retail investors and traders. How many shares would you attribute to retail buy and holders? I don't think 100 million is an unreasonable assumption at all.
Using these assumptions (which I feel are low given the "uniqueness" of SLV), that leaves 29mm for trading. 29mm shares enabling 360m transactions over five days with out a hiccup? That doesn't sound right to me.
My point is there is opacity in ETF ownership across the board. Most things it doesn't matter that much in, but when you are claiming the shares are 97% backed by silver, it does.
Would it be unreasonable to think Hedge funds hold $10B in SLV? How about $15B?
$15B leaves 38mm for retailers and traders. Would that make you uncomfortable?
I understand it's illegal to sell the same share of something to two different people, but as you may recall, JOSB had more shares short than existed for a long time a couple years ago, and the SEC did nothing.
I'm asserting that the SEC has no mechanism in place to verify that the ownership of an ETF doesn't exceed shares outstanding. Most ETFs, it's not going to effect anything (cash settle - so what), but in the case of SLV, allowing a 100 million "phantom" shares to trade defeats the purpose of the trust, because purchasing 100million ounces of silver would skyrocket the price (there are only 35mm ounces of registered silver at the Comex as of this writing).
Maybe the SLV hasn't reached this condition yet (obviously I believe it has), but I think you'd have to agree it could. Would TPTB:
The point I was originally trying to make is options would compound the effects of 1 and 2. Clearly option 3 is what the weasels in charge would opt for.
To me, it's not a question of IF this will happen, it's a question of when.
And it's not the trading volume, it's the ownership that should take shares out of circulation that is the driving force. What would you guess those numbers to be?
Congratulations,
In just a handful of posts, you've proven yourself far too stupid for the discussion.
Really, bright boy? I passed my equivalent of the Series 7 with honours, and I've been trading options for over 30 years. What options experience do you have, beside posting arrant nonsense about them?
You have NEVER addressed a single point that I brought up, and you still seem to be under the delusion that if you buy a call that ends up in the money, somehow the company/ETF is under some obligation to issue new shares. That is monumentally stupid, wrong, and ignorant. No wonder everyone else junks you.
Wanna compare Series 7 scores?
Guess you've been playing in never-never land so long, you've forgotten reality....
When I hear dimwits like you touting themselves as experts "with honours," I completely understand how things like Enron, Madoff, and AIG happen. You assume everything's under control, because you're not smart enough to understand when they're out of control.
Go back and re-examine your statements.
They are not responsible if: "The value of the shares of the Silver Trust will be adversely affected if silver owned by the trust is lost or damaged in circumstances in which the Silver Trust is not in a position to recover the corresponding loss."
Why is the Silver not insured against Theft, Loss or Damage?
Cuz' it ain't their risk!
Caveat emptor!
Accumulated Latin lessons the Bearing has learned so far on ZH:
Fed delenda est.
In pace requiescat.
Quis custodiet ipsos custodes?
Res publica mortuus est. Vivat imperium.
Corruptissima republica, plurimae leges.
Caveat emptor.
How can there be any doubt that ZH is not full of great minds?
Indeed, average ZH reader IQ is >180. Adjusted for trolls et al., probs >200.
Best comment/question in the entire chain so far.
>Silver not insured against Theft, Loss or Damage?
It may be.
But in circumstances where they ARENT covered* then there will be a risk there.
--
* A far fetched example; a nuclear accident leaves vault area inoperative.
What happens then? It's probably not covered by any insurance policy.
You think too logically. The tin foil hats don't want to hear it.
He thinks precisely correctly. All vaults are insured, many by Lloyds, and there are specific exceptions under which losses aren't covered, nuclear war and terrorist attack being the two main exceptions. Check out any depository state-side and you'll see the same qualifiers.
Also, many depositories don't bother to insure the full amount of their metal once they get to a certain level, e.g. once you get to $300 million, you don't bother to insure the next $100 million. The thinking is, it takes so long to move $300 million in silver physically that the thieves would be discovered long before they got to that amount. As the price of silver goes up, though, those limits might get raised.
Fine print, who reads the fine print? Just buy and go hoot hoot when you see the digits on yo computa screen move up.
What about all of the "Lost" Gold that was in the basement in I think it was Building 7 that went missing on 9-11. Wonder if that is the Gold that was used in GLD.
Here is an interesting video with David Morgan of Silver Investor - it shows a Wall street bank fraud movie clips and then what happened as it all tumbled down.
The point he made is this could be the future and physical silver is where it is at to protect oneself.
http://sherriequestioningall.blogspot.com/2011/04/whoa-watch-this-movie-...
Mentioning JPM holds the silver was not credibility enhancing. It seems to me they could find some people on the internet to print off a title to that silver and have that claim hold up in court when the repossess it.
Why is the link in the email to the Feb 2010 audit and not the Dec 2010 audit?
Unless you hold the physical silver yourself all these funds have problems. If anything big ever happens the first thing they do is preempt withdrawls and deliveries and make you take currency for settlement. The main risk to precious metals is political not economic.
What a weak letter....
And does anybody remember all those $25 puts? Me thinks that was someones winning lotto bet.
I agree. Mind you, actual silver spot has to trade down, and no there won't be a loss in confiance in the ETF.
I agree. Mind you, actual silver spot has to trade down, and no there won't be a loss in confiance in the ETF.
The SLV is a ticking time bomb! People need to get Physical!
http://silverliberationarmy.blogspot.com/
ummmm, about those risk factors you mentioned...
"... you will not have the protections...under the Investment Company Act of 1940..."
that would be everything here:
http://www.sec.gov/about/laws/ica40.pdf
plus updates from Messrs. Dodd & Frank
"... you will not have the protections...under the Investment Company Act of 1940..."
Oxymoron.
I just wonder at which price they will calculate the value of "silver lost"? Something tell me it would not be the spot price of physical silver ;-))
"The custodian has no obligation to replace any silver lost under circumstances for which the custodian is liable to the trust. The custodian’s liability to the trust, if any, will be limited to the value of any silver lost, or the amount of any balance held on an unallocated basis, at the time of the custodian’s negligence, fraud or willful default, or at the time of the act or omission giving rise to the claim for indemnification....
Any loss of silver owned by the trust will result in a corresponding loss in the NAV and it is reasonable to expect that such loss will also result in a decrease in the value at which the iShares are traded on NYSE Arca."
"baskets" bitches!
baskets bytches..
big dogs get silver
the rest, worthless paper
Now if SLV was legit, why would they need to "talk it up"? Afterall wouldn't this be an excellent arbitrage opportunity for someone like Goldman?
Me thinks they dost protest too much......
we need two more refutations (denials) like this before slv collapses.
The author of the email does a great job of dodging the issue. The guy is a pro, no doubt about it. He does add significant clarity however, because "Its not official until it is officially denied".
http://www.TheAngryGrapes.Com
That was the most interesting letter from a manager of a 'fund' that I have ever read. That dude was about as doom and gloom on his product as he could be without yelling, "RUN AWAY! RUN AWAAAAAY!"
If I didn't know any better I'd bet he didn't want people to buy SLV... oh wait... he does't want people to buy his product.
Red flag bitchez...
LOL.
Jeez you guys are so gullible.
LOL
Talking book by shooting Tomahawks.
Just think of it, the more missiles launched, the more silver expended, the greater demand for physical, the higher the price goes, subsidized by gubamint demand.
TARP for the silver boys!
Let's get this bank run started!
I'll second that thought.
I wish I could help with more than moral support, but 98% to 100% of my assets have been in physical gold and silver for years.
So, everyone... you've arrived at the party in the middle, but the good news for you is, the best is yet to come.
Time to shrug off those dollars and buy gold and silver.
Silver, Gold, and shame on CNBC!
$50 Silver is now obviously the target near term but longer term is more important. The shorts (JPM) are now hopelessly under water and there IS no escape. Yes the Fed can funnel more cash to maintain this position but the higher Silver goes, the higher the likelihood that the longs will demand physical delivery.
There are all sorts of upside forecasts including James Turkcalling for $400 Silver, as mentioned before with Gold, trying to put a Dollar number on anything (even a cup of coffee) during a hyperinflation is impossible because no one can possibly know how debased the currency will become. For that matter no one even knows if the Dollar will survive with enough value to be replaced or whether it goes the way of the Reichmark and disappears to zero.
After ten years of Gold, Silver and their miners outperforming everything on the planet, CNBC should hang their heads in shame.
They pooh poohed Gold and Silver nearly all the way up and for the most part have only had guests on that conveyed nothing but fear of loss to their viewers.
Pick whatever level you'd like, Gold $300, 500, 1000, 1,000 or Silver $4, 7, 15, or $20, most of their guests gave the wrong reasons for the rise and nearly always said "they may run another 5% or so but this stuff is dangerous".
They even started with their bubble bullshit with Gold at $1,000 and Silver at $17, what a disservice they have done.
Remember back in 2002, 2004 timeframe where Larry "King Dollar" Kudlow would laugh at anyone even remotely interested in metals. They would have mining co. CEO's on that sounded more like apologists for their product rather than cheerleaders. It has been and still is pitiful.
THEY have been wrong for more than 10 years now, REALLY WRONG!
Remember, so many years ago, when that "whacko" Bill Murphy from GATA was hooked off of the set of CNBC by Ron Insana because $600 Gold was insane stuff.
Bill still has not been invited back even though nearly EVERYTHING he forecast over 10 years ago has already come to pass and is happening now.
No, they keep bringing out the same clowns who have been wrong all these years and are still wrong. The most famous is Dennis Gartman who probably has lost money in Gold trading all these years because he keeps getting whipsawed. To lose money from the long side in a market that has increased 5 fold is almost mathematically impossible, notice I said "almost"!
Even a blindfolded monkey would have stood good odds at making money in the metals. Gartman, Nadler, Christian, Klapwjik, Prechter and all the rest have done huge damage to their clients by constantly yelling "shark in the water", had their clients just bought and never ever sold where would they be now in comparison?
Hindsight is 20/20 but there were some who were bullish, really BULLISH before the year 2000 and as it turns out for the right reasons.
Does CNBC ever have anyone on who has been really right for the last 10 plus years?
Especially if they were right for ALL the right reasons? NO, they don't. Only recently is anyone bullish Gold allowed to speak on their hallowed airwaves.
They didn't because they couldn't! If after 3 or 4 years they started whipping up public sentiment and actually told the truth about "fractional reserve" metal, we never would have even made it to the fall of 2008, the GFC and ultimate bankruptcy of the Treasury would have exploded by 2006 or 2007.
Hell, it might not have even happened if Gold shot to $2,000 back in 2004 because the debt trough that Treasury drinks from would have already gone dry!
You can hold your breath if you wish waiting for an apology from CNBC for instilling "metal fear" all these years but it's not coming.
Once the whole system implodes, you will only see a few recent clips of guests with their heads screwed on correctly with CNBC exclaiming see, "WE TOLD YOU SO"!
While writing this they now have Rob McEwen, ex Goldcorp CEO and current CEO of Minerva talking about $5,000 Gold while the brainless bimbette hostess talks about taxi cab drivers who are bullish on Gold being a good reason to sell.
So with today as an example, who you gonna believe, the brainless bimbo or the guy who has been right for the right reasons for over 10 years?
With CNBC the more things change the more they stay the same!
www.lemetropolecafe.com
Just play SLV with very short term ITM calls
Fish, barrel
Otto von Bismarck
So... is PSLV still safe or what?
Panic? Tunga is way past panic. Heres a link to the prospectus and a couple of excerpts from the first of 44 pages.
http://us.ishares.com/content/stream.jsp?url=/content/en_us/repository/r...
50,000 iShares is called a "Basket". Only registered broker-dealers that become authorized participants by entering into a contract with the sponsor and the trustee may purchase or redeem Baskets. Neither the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. 50,000 iShares x $46 Per Ounce =$ 2,300,000.00 Thats what you'd need to put up right now if you wanted to turn this digital silver to physical silver.double whammy - somethign very funky just happened here, the site wobbled
Gee thanks for the clarity Blackrock. I have complete faith that you will do the right thing.
OK I just woke up. That was a helluva dream. I dreamt there really was silver in the Morgue vault that actually was allocated and they did not use it on the sly to short the baby precious.
Thank god the SEC is on the case.
Bazooko's Circus
This just in....
"Bear Stearns is fine..."
http://www.youtube.com/watch?v=gUkbdjetlY8
I've heard that. So many people have said bear sterns is fine. It must be true.
Interesting. The author linked the July 2010 inspection which states that the next regular inspection is December 2010. Why not link the latest (December 2010) inspection. Inquiring minds want to know!
www.Gold-Silver.US/forum
Good catch.
Blackrock --- they take their stewardship seriously.
Case in point: Anthracite Capital. Blackrock sponsored. Run by Blackrock employees. Blackrock took enormous fees.
Complete Wipe Out.
A Donut.
AHR.
Look it up.
Blackrock --- they take their stewardship seriously.
Case in point: Anthracite Capital. Blackrock sponsored. Run by Blackrock employees. Blackrock took enormous fees.
Complete Wipe Out.
A Donut.
AHR.
Look it up.
Blackrock --- they take their stewardship seriously.
Case in point: Anthracite Capital. Blackrock sponsored. Run by Blackrock employees. Blackrock took enormous fees.
Complete Wipe Out.
A Donut.
AHR.
Look it up.
Blackrock --- they take their stewardship seriously.
Case in point: Anthracite Capital. Blackrock sponsored. Run by Blackrock employees. Blackrock took enormous fees.
Complete Wipe Out.
A Donut.
AHR.
Look it up.
Send me 46 bucks and I'll hold silver for you too...
Trust me.
Hows about gettin' a different custodian?
That would actually help Blackrock's cred.
Holy Shit, that bar on the third row down on page 2231 is mine! WTF?!
Reminds me of that great SNL skit about Charles Schwab: "Read the prospectus." "I did..."
Pages numbered 29 & 30 speak of JP Morgan custody. Not simple, IMO.
Page number 18, "Not a Regulated Commodity Pool" is also not clear to me:
"...the Trust does not trade in any futures contracts on any futures exchange..."
What about futures contracts NOT on any futures exchange?
Why isn't there a simple definition of physical silver? That would be nice.
I don't know of any problem with SLV, but prospectus needs more legal expertise than necessary, IMO.
Futures = exchange-traded.
Lets see, trust JPMorgue with the actual goods. Trust us that your value is based on the lowest price silver ever was ever and that is before expenses that are truly astronomical due to the low value and high storage costs. He will be spending "time with his family" before long
the Morgue...never will I deal with them or show them any love. i'm not selling anytime soon at all.
www.forecastfortomorrow.com
I have a small amount of physical compared to most ZHers. I just hedged my phsyical buy shorting spot in a Forex account at 45.64. If I'm right the FRN's I accumulate from the trade will be used to purchase more physical. If I'm not, oh well there just FRN's.
The reasons for the short position:
1. The move from 42 is suspect. Spot RSI peaked at 42 on April 7th and has trended downward to flat since while the price hase risen 10%.
2. On the 1 hour chart the volatility was extreme in the last 18 hours of trading. Not a gradual grind ing up movement. The last 40 cents in price came after hours.
3. The 10 minute volatility has risen since April 7 indicating which suggesting a finite-time singularity.
http://www.marketoracle.co.uk/Article27656.html
Tyler - Where is Part 2 of the 40 May Option piece? I think it may be a very important in the coming days for the non-physical folks here on ZH.
Finally I came across this which analyzed the price of blue jeans and the price of silver. What do you all pay for the price of blue jeans? Hmm probably somehwere between 40 and 50.
http://thesheepletimes.com/2011/04/08/the-road-to-freedom-is-paved-with-silver/
Ooops No. 1 should read peaked at 92 on April 7th.
Trust but verify ... oh wait .... these days we just need verification. Where are the pictures? They're worth a thousand words.
Does anyone here use goldmoney or bullionvault? I'm considering an account with them...
Any customers? Reviews?
Goldmoney it is. Cheapest storage and other rates.
From the prospectus....
"The Custodian's selected sub custodians may appoint further sub custodians. These further sub custodians are not expected to have written custody agreements with the Custodian's sub custodians that selected them. The lack of such written contracts could affect the recourse of the Trust and the Custodian against any sub custodian in the event a sub custodian does not use due care in the safekeeping of the Trust's gold. See "Risk Factors" - The ability of the Trustee or the Custodian to take legal action against sub custodians may be limited..."
Translation: If there is any real gold behind this scam, it's not here serf. And if something happens to it, and if the paper shares collapse, go fuck yourself idiot serf.
If it wasnt for silver we wouldnt be in this mess
-Blackrock
I have something that will crush these bastards.Point out if I be wrong,but if there was "Real" "Silver" in there,and the market price on the SLV usually trades at a $.40-$1.00 (or more) discount to the physical market,isnt there an Arbitrage oppurtunity for someone to come in and buy 100,000 shares and...gulp...request physical redemption? And why has the spread between spot and the SLV increase from $.40 to $1.00 or more? Something doesnt smell right,and it aint JPM burning down.
And so damn what..."serial numbers"....howabout letting an investor who carries millions of dollars in this trash paper have a look at the actual bars and view all the "custodian" (and the sub custodians of the custodians sub custodians) vault inventories and cross referance the documentation? Proof they are not leased? or leased out???
I can make a list of phony numbers m'self as well,add a cute etf name, "Lucky Silver ETF",hold 50% of the fund in actual physical,for those pesky people who do not trust the ETF and want physical delivery,giving the naysayers proof that the fund has deliverable physicals,while the other 50% in phony paper.Same scheme over and over...
Bank-run economics.If everyone pulls out and takes delivery,theyll find only 50% is delivered,and the little guys get the paper,or are not qualified for delivery since they do not hold enough shares to be eligible for redemptions.So there will always be someone left that has to hold paper,and on the other side of the equation,the person lucky enough to get delivery disproves the naysayers and conspiracy theorists by taking actual physical delivery.Perpetuating the scam.
And if people get too clever,they will simply raise the required share limits for physical redemptions,which will be a sign that,well,its game-over.
Silver WILL sink the Comex.
Its a question of weeks, the silver correction:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=140#p31889
The observed acceleration of price growth and coming crash was predicted here, on March 13th:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...
To understand its a precrash situation, just measure the sharp growth number of times word silver is used in trader communications, in this site, for example. To have a bubble in silver, its not necessary to involve larger public, its enough that clusters of precritical herding are created within trading community where everyone shouts "buy physical silver".
That said, long term OWNING of silver is still safe, if its not used as collateral to some loan, but bought with own money, the value will drop for about 1-1,5 years by 40-60% (or , to 25-30 USD) compared to today, more compared to eventual peak ( 50 USD? -predicting superexponential peal values is almost impossible-its fine balance of unlimited sentiments and limited resources and creeping fear ) but having long positions is not-it is very dangerous right now.
Will a drop in silver cause drop in stocks as well as all commodities will correct a bit, except oil? It should, I think. But I am not sure.
Ill be more than happy for it to drop to $25-$30,certainly not just I.
Ill buy it all up in an instant.Or someone else if not myself.
If its $100,$50,or $5,Same thing.
Silver will go to $200-$300 within a few years,unless theres a massive expansion in mine production in the hundreds of percent.And assuming all the derivatives and mortgage and currency crisis are wished away with a magic wand.
CNI, the largest bullion dealer in Souther California is officially SOLD OUT of all Silver Products. This is not rumor, being that I went there today to purchase a 100 ounce bar, and was told I could order one, and I'd recieve it in 2 weeks.
I've been buying Silver and Gold from CNI for many years, and this is the first time I've ever seen them run out of all of their Silver products. This means that even though the price has gone through the roof, nobody is selling, everyone is buying, and there's a serious shortage.
When CNI can't lay hands on Silver, it only means there's none to be had.
Interesting observations, Goose ---- thanks for sharing them!
As in late 2008, I am guessing that the defenders of and apologists for the corrupt status-quo, such as Jon Nadler and Jeffrey Christian, will have plenty of bland and disingenuous denials of, and explanations for, the growing scarcity of retail silver products. In 2008, though, they could at least partly blame it on the concurrent plunge in the price of silver ---- but as is all too obvious, such excuses are NOT possible this time around.
http://shop.ebay.com/?_from=R40&_trksid=m570&_nkw=%22silver+bullion%22&_...
HTH
You can thank me later.
haha no way, i had no idea people were trying to trade physical silver like that on Ebay...i might actually bid on a few things this week, lol.
www.forecastfortomorrow.com
Silver anniversary of Fess Parker's Daniel Boone TV series is approaching. I guess BlackRock won't be a sponsor. It may take more than a Certified Financial Planner/Blogger to hold off Mingo as he raids JPM's London SLV custodial vault.
http://tradewithdave.com/?p=6107
Dave Harrison
www.tradewithdave.com
The SLV prospectus states clearly that the paper shares are backed by physical silver bullion deposited in a vault, not COMEX futures contracts or OTC-traded derivatives. However, one thing in the prospectus doesn't make sense, or maybe it's a typo:
"On the day of creation of the trust, a Basket required delivery of 500,000 ounces of silver. Since a "Basket" is defined as 50,000 iShares, and each iShare corresponds to roughly one ounce of silver (less cumulative fund expenses), I believe the "500,000 ounces" should have been "50,000 ounces." No?
First Draft
Guys:
Best I could do. Please forward to legal for "clean up". K. F.
Dear Investor:
Much has been made recently about whether our product, SLV, actually represents any type of claim on physical silver. Frankly, I have no idea. You see, all the silver to back this product is supposedly held in "trust" by our good friends over at JP Morgan Chase. What evidence do we have of this custodial ownership? Well, I am looking at a signed piece of paper from a Vice President of that venerable institution that says so. The problem is that a quick check of my records indicates that said Vice President has also signed a fairly significant number of recent foreclosure documents filed on behalf of JP Morgan. And we all know how that is working out.
In sum, there might be some silver to back some of our paper, there might not. But to me, thats what makes this so exciting! Hell, just read the prospectus. We don't take responsibility for anything! That's right, you could lose it all! But the really exciting part is my commissions check for selling this crap. Don't take my word for it. Just check with the gang at Scores. "Exciting" is probably an understatement for what took place when I showed them that baby. They really went crazy on my........
Anyway, best of luck investing and thank you for your business.
I traded SLV and GLD until August 2010 but then I read this.
http://www.bullionbullscanada.com/index.php?option=com_content&view=arti...
Which of course led me to this. (Morgan Stanley PM Fraud)
http://www.bullionbullscanada.com/index.php?option=com_content&view=arti...
Everyone needs to see this. (Janet Tavakoli-Fraud as a business model)
http://www.google.com/url?sa=t&source=web&cd=3&ved=0CCYQFjAC&url=http%3A...
So you can shove your PM ETF's right up Blackrock/JPM/LBE's hoohoo.
I love the language at the end of this Blackrock Rant... if you simply remove some things you get...Investing involves loss of principal. The iShares Silver Trust is not registered. Shares of the Silver Trust are not subject to regulatory requirements. Brokerage commissions will reduce returns. Several factors causing a decline in the prices of silver and a corresponding decline in the price of the shares. The amount of silver represented by shares of the iShares Silver Trust will decrease, the price of the shares will decline, and investors will lose money on their investment. The Silver Trust will have limited duration. The liquidation of the trust will result in losses to investors. There is no guarantee an active trading market for the shares, which result in losses on your investment. The value of the shares will be adversely affected if silver owned by the trust is lost or damaged. The Silver Trust is a passive investment, the value of your shares may be adversely affected by trust losses. Shares are not deposits or obligations of or guaranteed by BlackRock, Inc., and its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. Shares of the iShares Silver Trust may be bought or sold on the exchange through any brokerage account, shares are not redeemable. When comparing commodities and the iShares Silver Trust, it should be remembered the sponsor’s fee associated with the Trust is borne by investors. Buying and selling shares of the iShares Silver Trust will result in brokerage commissions, expenses involved will be dispersed among all holders of shares of the Silver Trust.
And especially the part... "shares will decline if Silver is lost!!!!!!!!" I can see the SLV trustees running around the vaults with their flashlights... "Why those tons of silver were right here!!! Dammit! Why, I saw them here yesterday!?!?!"
I believe that metals etfs are run properly and hold the intrinsic value. The problem is that in holding claim to physical stores they are the perfect vehicle for govt confiscation. They make the job FDR faced much easier. The difficulty the US would face with etf confiscation is that holders are global - but everything is more globalized than in the 30s including central banking. Here's how I see it unfolding:
1) Fiat currencies of developed countries collapse pretty much in unison
2) Those govts whose currency issuance far exceeds their actual assets panic while those govts with assets (BRICS) don't
3) Global consortium of panickers confiscate what assets they can (ETFs being plump ripe low hanging fruit) and promulgate new currency (albeit drastically depreciated) backed by whatever assets they can scrap together (including SLV which was trading at $200 and for which you were redeemed at $50)
4) If you don't accept the $50 with the mindset that you are helping the common good you will be frowned upon as objectivist scum - remember this would take place in a severely depressionary environment and most who made a lot of money speculating on an asset that does little to create value for society would feel a bit guilty when half their friends and family are without means.
BTW this does not mean that physical holders would be exempt - the govt would still go after that. In the 30s the govt didn't try to hard because they were going from a backed currency to fiat. They didn't need the assets. They could peg gold with fiat expansion. This time it will be in reverse. Instead of disbanding the need for metals in favor of fiat they will be collecting metals in favor of backed currency. They will have much less ability to contain prices. In the long run it may be much easier for etf holders to take their modest gains and feel they contributed to the "common good" than for physical holders to outrun a desperate coalition of governments and face scorn and prosecution.
disclaimer: I'm not making any political or moral judgements here just trying to figure out mechanically how things would unfold. Being right about the direction of a market or investment is easier than being better off economically after it all unfolds
Keep your silver people, it's going to get to $60 before long...keep watching for the cheesy ads to buy and buy, then sell it :)
www.forecastfortomorrow.com
Keep your silver people, it's going to get to $60 before long...keep watching for the cheesy ads to buy and buy, then sell it :)
www.forecastfortomorrow.com