This page has been archived and commenting is disabled.

SLV Trading At A Record Discount To NAV

Tyler Durden's picture


Probably the strangest development in the world of ETFs today is that the silver ETF, SLV, was trading at a discount to its most recently disclosed NAV of 38.1932 at well over 10% earlier, when the spot price of silver dropped to just over $32: an all time record. So momentum-based and emotional is the trading in precious metal ETFs now that there appear to be gaping arbitrage opportunities within these high volume products. Granted, the NAV is updated once a day, and we expect that should today's silver paper price not revert to the NAV, that the NAV will decline. Alternatively, if the price drops, the discount to NAV could creep to yet another all time low. And while these are merely artificial ETF mechanics, which can and should not be traded merely for the sake of their manifestation in the market, the reality is that total COMEX silver just dropped to another fresh all time low, following another 250k ounce reclassification from Registered to Eligible, and the withdrawal of 444k ounces, offset by the receipt of 109.760 ounces by JPMorgan (of all COMEX banks).

h/t Nolsgrad


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 05/12/2011 - 12:41 | 1268217 oogs66
oogs66's picture

didn't the bears tell us there will be 2 prices for silver?  the paper and the physical?  is this a manifestation of that?

Thu, 05/12/2011 - 12:47 | 1268251 ZeroPower
ZeroPower's picture


And i dont know if you mean SLV bears or silver bears, but either way, SLV does as the SI as the pure spot price of Ag does. There isn't any other way about it unless you'd want a class action suit on the 350MM+ shares, and only doomsayers try and make you think otherwise.

Thu, 05/12/2011 - 12:47 | 1268267 tmosley
tmosley's picture

The silver bears from silvergoldsilver.  The cartoon bears.

And yes they did.

A major silver exchange or instrument will collapse in the next two months.

Thu, 05/12/2011 - 12:54 | 1268283 NoBull1994
NoBull1994's picture

this chart is meaningless.  First, it is from yesterday, not today.  Yesterday, the SLV fell 8.3%, and the NAV would have been from close on Tuesday.  NAV may also be based on the time the commodity itself closes, not when the ETF closes, which also accounts for a price gap every day, up or down.

Thu, 05/12/2011 - 12:57 | 1268313 tmosley
tmosley's picture

Wait, what?  Did you look at the chart?  It's a long term (multi-year) chart.  Look at the last couple of months.  Weird shit going on.

Thu, 05/12/2011 - 13:24 | 1268476 NoBull1994
NoBull1994's picture

i'd suggest you go get your IQ checked...

Thu, 05/12/2011 - 13:33 | 1268505 spartan117
spartan117's picture

So please calculate the difference for us based on today's trading data.  Thanks in advance.

Thu, 05/12/2011 - 13:41 | 1268566 tmosley
tmosley's picture

How about you explain yourself rather than acting like a child?

Thu, 05/12/2011 - 14:15 | 1268722 Hugh_Jorgan
Hugh_Jorgan's picture

Exactly. Down goes another blowhard, chicken-shit who ran his mouth and then realized he had been schooled. He won't be back to comment on this thread.

Thu, 05/12/2011 - 14:32 | 1268794 tmosley
tmosley's picture

I don't mind people like that.  I just want to learn.  And I want them to learn.  I don't care about who was right in the past so much as I care that I am right in the future.

Seeing past predictions come true is kind of neat, though.

Thu, 05/12/2011 - 14:45 | 1268872 KidDynamite
KidDynamite's picture

if you actually want to learn, I wrote the rebuttal to this (absurd, nonsensical) post already:



Thu, 05/12/2011 - 14:59 | 1268936 Bay of Pigs
Bay of Pigs's picture

And right on cue, we see Mr Dynamite grace us with his presence.

Learn something? You assume SLV has all that silver? That's a laugh. Nice try. Some of us can think for ourselves around here.


Thu, 05/12/2011 - 15:59 | 1269256 KidDynamite
KidDynamite's picture

sigh.. i don't know why I bother, but Bay Of Pigs, if you don't believe that SLV "has all that silver," that means it's trading at an even LARGER premium, not a discount.

again, this isn't debatable, it's not a "disagreement," it's a fact. If you think SLV is lying about their silver holdings, then their "True NAV" is even lower (and thus the ETF is trading at an even larger premium) than the one I showed you how to calculate in my post.

carry on...

Thu, 05/12/2011 - 17:36 | 1269700 Bay of Pigs
Bay of Pigs's picture

I don't give a rat's ass about SLV and their supposed NAV. It means nothing to me. It is a bankster FRAUD, much like GLD. The fact you use your arguments based upon trusting these ETF's tells me all I need to know about you. 

Thu, 05/12/2011 - 21:02 | 1270306 tmosley
tmosley's picture

lol, so if SLV doesn't have any silver, then silver is worth zero.

That's what I call LOGIC!

Thu, 05/12/2011 - 16:56 | 1269500 Ethics Gradient
Ethics Gradient's picture

I understood your point and my IQ is 6.

Fri, 05/13/2011 - 02:22 | 1270933 JiveDadson
JiveDadson's picture

All true.  The lastest "announced NAV" was based on the Afternoon London Fix for May 11.  Silver subsequently fell from around 39 to around 32.  The price of SLV followed the spot price minus accrued fees, exactly as it is supposed to, but the "announced NAV" had not yet been updated.  If you can find a resource that tracks it, you can follow the symbol SLV.NV, which tracks the NAV of SLV in realtime.


The author of this article demonstrates a shocking lack of knowledge of how SLV is supposed to work.  The info about the NAV is in the prospectus, and an explanation of "announced NAV" is on the SLV website at iShares.

Thu, 05/12/2011 - 13:00 | 1268316 oogs66
oogs66's picture

Yes those are the bears I meant. The cartoon ones. And this does seem to fit with their last video

Thu, 05/12/2011 - 13:02 | 1268328 Smartie37
Smartie37's picture

Nice volume in CME June $260 puts today, complementing the >3,000 open interest for $270 - $280 puts..................just basic hedging ??????   

Thu, 05/12/2011 - 13:06 | 1268363 bankrupt JPM bu...
bankrupt JPM buy silver's picture

Bears what?  Part 6 who?  huh?


Thu, 05/12/2011 - 12:41 | 1268218 kalasend
kalasend's picture

Isn't SLV going to offload paper contracts to adjust to its market price?

Thu, 05/12/2011 - 12:39 | 1268223 augie
augie's picture

This is gonna be a bloodbath.

Thu, 05/12/2011 - 12:54 | 1268295 nope-1004
nope-1004's picture

Big time!  The interesting part of all these margin hikes to suppress fiat price is that, going forward, the effectiveness of margin hikes have an ever decreasing effect on spot price.  A margin increase from 10% to 15% is a 50% jump, 5% increment.  A move from 30% to 40% is only a 33% jump, but a 100% increase in the incremental margin increase from 5% to 10%.  Total and complete diminishing effect as they push the futures market over the cliff.  Spot price will simply disconnect on its own.  The criminal banksters are out of silver and panicking.


Thu, 05/12/2011 - 12:59 | 1268329 dhengineer
dhengineer's picture

Exactly, just look at the prices for Silver Eagles on ebay today.  Final bids are in the 43 to 45 range for individual coins, a premium of around $10 to paper spot price....

Thu, 05/12/2011 - 13:21 | 1268457 Hugh G Rection
Hugh G Rection's picture

diminishing marginal returns for margin increases....


has a nice ring to it.


Thanks for the discount fuckos, off to the coinstore

Thu, 05/12/2011 - 12:39 | 1268224 Glasgow Gary
Glasgow Gary's picture

When the physical markets break away from paper, this is how it'll begin. We're not quite there yet. But, margin attacks will only hasten discontinuities, and then eventually abandonment of the futures markets. Of course, there is a great opportunity for countries to start new futures exchanges with transparency, and clear rules.


Thu, 05/12/2011 - 13:05 | 1268320 Construct
Construct's picture

And why would other Governments and their Central Bankers be any different from the American one? You have HFT and fraud going on in every single stock market these days.


War Speculators Goes Global Sanghai Gold Exchange Hikes Silver Margins Third Time Month

Thu, 05/12/2011 - 13:20 | 1268440 Urban Redneck
Urban Redneck's picture

The spot market is relatively decentralized, but the more futures markets and more governments that are involved, the more competing interests there are, and thus it is  more difficult to maintain price manipulation over time.

Thu, 05/12/2011 - 12:44 | 1268231 CapTool
CapTool's picture

Nav is a dynamic number, IF you are looking at the published closing one that hasn't changed you need to find a new job.

Thu, 05/12/2011 - 12:54 | 1268292 bobby02
bobby02's picture

"Net Asset Value (NAV) is determined as specified in the prospectus: the iShares Silver Trust's silver and other assets are valued on the basis of each day's announced London Fix"

Price discovery? We don't need no stinking price discovery.

Pesky facts should never be an impediment to whipping up hysteria.


Thu, 05/12/2011 - 12:44 | 1268234 Sudden Debt
Sudden Debt's picture

Everybody should stop buying untill it hits 1$ so THE remainders can be bought on THE cheap so That there is no more left.

Thu, 05/12/2011 - 13:10 | 1268370 Hacked Economy
Hacked Economy's picture

So perhaps all of us on ZH should temporarily encourage a short campaign on silver to help JPM drive the price down to $1?

Naw.  Forget it.  I just picked up some more SAEs and Maple Leafs (leaves??) yesterday.  Gotta love those silver bears.

<puts on robot voice>
"Pay no attention to the fiat price.  Just buy the silver while you still can..."

Thu, 05/12/2011 - 15:13 | 1269024 damnitalready
damnitalready's picture

I agree, and I personally encourage other's to short their physical as much as possible by taking the other side of that trade... :)

Thu, 05/12/2011 - 13:12 | 1268398 fiddler_on_the_roof
fiddler_on_the_roof's picture

I will buy silver when "most" of ZH lose interest in Silver. Not much, but equal weight to my Gold - a mint box would be nice.

Thu, 05/12/2011 - 12:45 | 1268236 LRC Fan
LRC Fan's picture

That $25 SLV put buyer clearly knew something big was about to happen.  That trade was ridiculous.  Wonder how deeply ITM it will be come July? 

Thu, 05/12/2011 - 12:45 | 1268252 SheepDog-One
SheepDog-One's picture

Have to wonder who sold them?

Thu, 05/12/2011 - 12:47 | 1268266 ZeroPower
ZeroPower's picture

Haha ya, i bet nothing but a :))))) on that happy camper's face!

Thu, 05/12/2011 - 12:48 | 1268272 LRC Fan
LRC Fan's picture

Either AIG or GM

Thu, 05/12/2011 - 12:49 | 1268273 LRC Fan
LRC Fan's picture

Either AIG or GM

Thu, 05/12/2011 - 13:00 | 1268314 I did it by Occident
I did it by Occident's picture

yeh, probably a TBTF player.  i'd like to know so i can short whoever it is. 

Thu, 05/12/2011 - 12:53 | 1268291 unwashedmass
unwashedmass's picture

ya know, has it occurred to anyone that the buyer might have been someone from the Manhattan DA's office or connected there?


Thu, 05/12/2011 - 13:02 | 1268326 I did it by Occident
I did it by Occident's picture

or someone from the CME before the rate hikes.  yeh,that would be shocking  /sarc

Thu, 05/12/2011 - 13:16 | 1268429 fellatio is not...
fellatio is not fattening's picture

If they are smart, and I do not doubt they are, they would have closed out 1/4 the posn and now have a cost basis of ZERO, a no risk trade that's millions of $$ ahead, I am impressed.  Now we wait til they trade again, maybe CRUDE

Thu, 05/12/2011 - 12:51 | 1268242 Sophist Economicus
Sophist Economicus's picture

BTW, Sprott PHYS is damn close to NAV    PSLV is around NAV too


Edit:  Putty is right!    PSLV is no where near NAV - I looked at the yesterday closing price  .vs. the computed NAV number!     Sorry - still arount 17% premium there..


Thu, 05/12/2011 - 12:47 | 1268248 cowdiddly
cowdiddly's picture

JPM 109.76 Ounces?  The only thing I know of that has .76 ounces is a Morgan Dollar. They must have had all the tellers going through the Ike rolls and Found a Morgan and immediately ran to the vault with it. LOL

Thu, 05/12/2011 - 14:16 | 1268724 NotApplicable
NotApplicable's picture

The tellers? Hell, Blythe is probably sitting at her desk right now, sorting away.

Either that, or she's been to her local coin dealer. Or she stole it from her gandmother or something.

Thu, 05/12/2011 - 13:13 | 1268249 silberblick
silberblick's picture

With the ever lowering price of silver, there is only one thing to do: BTFD. Watch this animation to get inspired to do so:

Then head over here to read why silver market mainpulation will not end anytime soon:

Thu, 05/12/2011 - 12:47 | 1268250 buck4free
buck4free's picture

Silver chart starting to look like Case-Schiller. lol

Thu, 05/12/2011 - 12:49 | 1268259 SheepDog-One
SheepDog-One's picture

Just checked on my physical silver here, looks same as always to me. Nothings changed its only gotten worse, I'll be hanging onto my silver for the duration. Everyone else can trade for paper.

Thu, 05/12/2011 - 13:10 | 1268390 Hacked Economy
Hacked Economy's picture

That's right.  There are "traders" and there are "investors".  I'm looking at the long trend and holding my physical PM accordingly, so color me as an investor.

Thu, 05/12/2011 - 13:54 | 1268631 Smiddywesson
Smiddywesson's picture

Me too.  Physical only.  I just don't have the nerve left to trade this wacky price action.

Thu, 05/12/2011 - 12:45 | 1268256 tmosley
tmosley's picture

Hmmm, haven't heard anything from the LBMA for a while.  Because of that, I wonder if they won't be the first to go?

Thu, 05/12/2011 - 12:55 | 1268287 I Told YOU So
I Told YOU So's picture

I would luv for you to be right on this, but alas the "red shields" setup/own the LMBA, and they (unfortnunately) might be the biggest TBTF

Thu, 05/12/2011 - 12:59 | 1268324 tmosley
tmosley's picture

Default is not the same as failure, the way a chest shot doesn't kill a zombie.

In a free market, they would be dead.  But we don't have one of those.

Thu, 05/12/2011 - 13:32 | 1268503 wirtschaftswunder
wirtschaftswunder's picture

Admit that your are wrong on this topic too! Default ALWAYS accompanies business failure. You should knoe about failure.

Thu, 05/12/2011 - 13:34 | 1268522 Burnbright
Burnbright's picture

Greece, GM, GS, JPM, AIG, Ireland, Iceland, Bank of America ... What was that again?


Thu, 05/12/2011 - 13:45 | 1268568 tmosley
tmosley's picture


Thu, 05/12/2011 - 13:42 | 1268550 bobby02
bobby02's picture

The LMBA is a trade association, not a counterparty. They are not on any side of any trade, ever. Thus, they cannot default. Their only function is to set standards and trading rules.

I personally don't care if anyone is bullish or bearish on any given asset , but I do not see what is to be gained by ignoring or distorting the facts.

Thu, 05/12/2011 - 13:52 | 1268607 tmosley
tmosley's picture

Well, if you want to get technical about it, the COMEX isn't a counterparty either.  In both cases, the bullion banks are the counterparties, and they are the ones who will default in both cases.

Thu, 05/12/2011 - 13:56 | 1268644 bobby02
bobby02's picture

That is 180 degrees wrong. The CME IS the counterparty for EVERY trade. They guarentee both sides of the deal. When you open up a limit, it's on the CME group, not whoever takes the other side of the trade (bank, miner, spec whatever). That's what makes the system work.

Thu, 05/12/2011 - 14:31 | 1268816 tmosley
tmosley's picture

If that is the case, where does the CME keep it's gold and silver?  As far as I know, only the bullion banks have those in storage.

If the CME doesn't have the metal, how can they guarantee against a default?

But then, I guess that's the point, isn't it?

Thu, 05/12/2011 - 14:51 | 1268888 bobby02
bobby02's picture

No, that's not the point at all, but first do you see now that the LMBA and the CME are entirely different? The LMBA is a trade association; the CME is an exchange. If the LMBA disappeared tomorrow, nothing would really change. If the CME blew up, which is at least theoretically possible, you might not get execution, although your cash loss would be limited to your margin, which you should get back, unless there were major fraud.

(The CME has been around for like 100 years and I don't think any customer has suffered a loss.)

As for the authorized storage facilities, I think they are mostly bullion banks but there are a few others like Brinks. I'm sure you can find that info on their site. If one side of the trade couldn't deliver, CME would make the other side whole by using the margin that the defaulting side put up.

The only way this could really happen is if CME risk management totally fucked up and miscalculated the required margin. This is the very same reason exchanges raise margins when prices go up (to maintain margin as a %) and more imporantly when vol rises (potential losses get larger).

Thu, 05/12/2011 - 16:38 | 1269425 tmosley
tmosley's picture

Yes, I know the difference.  One is an asylum run by the patients, and the other is an asylum run by the inmates, but with an administrator that does what he is told and is "responsible" for the inmates actions--even though he is a paraplegic and they do everything for him, he is somehow supposed to ensure that they don't escape or kill each other or commit any other mischief.

And yes, many customers have suffered losses.  They changed the rules around so they didn't count it as a default, but they certainly took losses.

And as to your final note, the thing about the coming COMEX default is that margin has literally nothing to do with the process.  Those who stand for delivery pay in full.  No amount of dollars in a margin account can do anything about it if there is no silver in the warehouses.  That is the point of what is going on now.  Margin hikes are a nasty trick, especially when they come fast and furious like they have, rather than, say, once a week, or even better, according to a publicly available formula. 

Also, please understand that I am not "mad" at you or anything.  I welcome any and all corrections to any false facts that I present, or the pointing out of any holes in my logic.  What I don't like is lies, half truths, and bluster, which is all that comes from the trolls.

Thu, 05/12/2011 - 16:54 | 1269478 bobby02
bobby02's picture

Very colourful similes, but who exactly has defaulted on COMEX? Who suffered what losses? If, as you say, there is no silver in the warehouse, then the CME is on the hook - they are the counterparty. They have to go out and get the silver. (Hopefully the margin covers the cost.) Who has stood for delivery and not gotten silver?

And again, margin is the purview of risk management: When prices rise, margins rise. When vol rises, margins rise even more. It's just that simple.

Thu, 05/12/2011 - 21:05 | 1270321 tmosley
tmosley's picture

Go to Harvey Organ's blog.  Read about the huge number of people standing for delivery who just stop standing despite no delivery taking place.  This only started happening in December.  It NEVER happened before that.  But it happens every month now, many, many times each month.

The only thing that could cause that is a cash payoff, which is a technical default, and is against exchange rules (and the law, I'm fairly certain).

Further, there are examples in the past of people being hurt.  The Hunt brothers being the obvious choice.  They stood for delivery, then the exchange changed the rules, and wouldn't let them buy any more, then totally screwed them.  That was a default as well.  They just didn't call it that.  And the forced liquidation that ensued ensured that they didn't have to deal with it again for quite some time--until now, apparently.

Thu, 05/12/2011 - 19:43 | 1270075 XPolemic
XPolemic's picture

That is 180 degrees wrong. The CME IS the counterparty for EVERY trade. They guarentee both sides of the deal. When you open up a limit, it's on the CME group, not whoever takes the other side of the trade (bank, miner, spec whatever). That's what makes the system work.

That would make them the clearing house, not the counterparty. The counterparty is the other side of the trade, PERIOD.

The CME manages the counterparty risk by requiring every counterparty to post a bond (margin) against their positions. If you were, say, a bank, and you sold a position OVER-THE-COUNTER, to a COUNTERPARTY, then you would need to manage the counterparty risk yourself.

Just because the CME manages the counterparty risk doesn't make it the counterparty.

Thu, 05/12/2011 - 12:50 | 1268260 Putty
Putty's picture

This is incorrect.  SLV is trading at NAV.  PSLV is at a 17% premium, it just looks closer to NAV because it's trading in the 15 range rather than at the all time high of 23.

Thu, 05/12/2011 - 12:50 | 1268261 Smartie37
Smartie37's picture

Another "funny" thing about the ETF is any naked shorting that occurs, which further distorts the NAV since no hard metal is deposited for the new shares that are "created".  This was covered in a recent letter to the CFTC by one of the vocal opponents, maybe Butler.

Thu, 05/12/2011 - 12:50 | 1268262 Cognitive Dissonance
Cognitive Dissonance's picture


As you continue to report on more and more COMEX Silver being converted to Eligible, could you please change that term to "Edible" to keep MethMan happy?


Thu, 05/12/2011 - 13:22 | 1268461 tiger7905
tiger7905's picture

People are simply moving from the COMEX to ETFs and ultimately physical silver.

Thu, 05/12/2011 - 12:47 | 1268263 Hedgetard55
Hedgetard55's picture

Question for silverbugs.

If there is a big divergence between physical and paper price for silver, how does that affect miners? Do they follow the paper or physical price?


Thu, 05/12/2011 - 12:52 | 1268276 tmosley
tmosley's picture

The miners will do little to nothing until money flees from SLV and GLD.  Once they flee those fraudulent instruments, they will seek out other places to get exposure to metals, which the miners will benefit from.  The timeline on this is uncertain, and the miners will hurt bad until it happens.

No-one said becoming an oligarch would be easy.

Thu, 05/12/2011 - 12:57 | 1268301 Hedgetard55
Hedgetard55's picture

Thanks for the reply.

Thu, 05/12/2011 - 12:58 | 1268307 Rynak
Rynak's picture

tm, in another thread someone claimed that the costs per oz for mining, minting and melting, would total 35$. I asked for links to data, to verify that claim. Got no response.

Do you have any links to data, about the costs? (i'm aware that other factors like i.e. exploration matter too.... still, it would be interesting to know the "barebone" costs).

Thu, 05/12/2011 - 13:06 | 1268354 tmosley
tmosley's picture

Miners don't like giving out that kind of information.  They also have an incentive to underestimate their per ounce costs, so they likely all do.

The fact that the price rose from ~$17 to ~$30 in 2010, but production was only able to increase by 2.5% tells me that the costs are significantly higher than reported.

And for comparison's sake, it rose from $11 to $17 the year before that, so if you want to argue a lag time, that 50% price increase only yielded 2.5% the next year.

Thu, 05/12/2011 - 13:34 | 1268506 wirtschaftswunder
wirtschaftswunder's picture

That is a false statement

Thu, 05/12/2011 - 13:40 | 1268538 Rynak
Rynak's picture

tmosley, what was that guy again back then, who wrote all those one liners? oh, wait, i remember..... that too was "that guy" (for some reason i still cannot remember his name.... even though he spammed so much, it felt so boring that all i remember is a signatureless sea of flames from a 12 year old)

Thu, 05/12/2011 - 13:44 | 1268580 wirtschaftswunder
wirtschaftswunder's picture

You reley on mosely any more than you do and you'll be broke.

Thu, 05/12/2011 - 13:52 | 1268613 Rynak
Rynak's picture

Well, even if i would do this, that still seems more clever than relying on someone who claims that he is a millionaire, yet has the spelling skills of an 8year old, and nothing better to do, than to troll blogs.

Thu, 05/12/2011 - 13:54 | 1268619 tmosley
tmosley's picture

Yup, same guy.  He's had literally a dozen names.  Go back through any old gold or silver threads, you can always pick him out by the high volume of one liner insults he leaves everywhere.  His last name was long juan silver, and before that William the Bastard.

Thu, 05/12/2011 - 14:23 | 1268764 Piranhanoia
Piranhanoia's picture

Henny Youngman or the Unknown Comic?

Thu, 05/12/2011 - 17:41 | 1269720 mick_richfield
mick_richfield's picture

This is a useless comment.

Thu, 05/12/2011 - 13:34 | 1268520 Hephasteus
Hephasteus's picture

Mines are multi. If it comes from sulphate ores there's all sorts of chemicals processed and sold, lead, tin, silver, gold. If it comes from copper mines same thing.

So you can't even calculate cost inputs. If you're after tin and sell mostly tin then there's 0 cost input for silver and gold and lead you also get.

If you're after oleum and make most of your money on oleum then you don't care about the metals. There's just the cost to mine. And the profit from what you mine. There are lots of mostly silver mines but they are not economically viable. It's like nuclear power. You don't want it or judge it's cost on nuclear power you want it to enrich uranium and simply use power plants to offset your costs.

Silver is not mined and not targeted to mine. Lead copper for bullets sulfuric acid for batteries, and chemicals for war machine are what they mine. They just mine the stuff and when they have all these extra things they develope industries or fads to use them. Mines are probably treated like defense industry guaranteed 20 percent profit etc.

Thu, 05/12/2011 - 13:49 | 1268593 Rynak
Rynak's picture

Thanks. Do you know if and how much copper prices are manipulated?

Thu, 05/12/2011 - 13:56 | 1268626 tmosley
tmosley's picture

JPMorgan cornered the market a while back, and appears to be using copper as a hedge against their silver shorts.

Thu, 05/12/2011 - 14:09 | 1268686 Rynak
Rynak's picture

Blergh - all referencepoints owned..... how convenient.

Thu, 05/12/2011 - 14:46 | 1268754 Hephasteus
Hephasteus's picture

I don't think that's what it is. I don't know for sure but....

Most copper is used by building and home industry. Like I said when you mine you get tons of all kinds of stuff. Copper is artificially up in price and there are wharehouses full of partially proccess copper in china.

During the great depression copper did a huge seasaw and hurt jpmorgan bad. There's just something about them need a full healthy set of industries in all the commodities to keep it from going terribly wrong. I think copper is how they offset prices on gold and silver. And they are somehow forced to store it and manipulate it hugely up to keep the formulas working.

That link gives a little bit of information. But when you control the banks you control the military. So they love to start wars just to help out their mining operations. Make no mistake mining is completely controlled by the banks and presented in a strange way so you can't figure out what they are up to. They'll price fix as much as they can to supplement what they are really after.

Pluto is in charge of mines and mining. And plutocracies do all the mining.

Thu, 05/12/2011 - 14:17 | 1268727 JohnG
JohnG's picture

This company is a pure silver mining operation:


Also sell this silver that they mine.


Therfore you are very wrong.

Thu, 05/12/2011 - 14:28 | 1268779 Hephasteus
Hephasteus's picture

And this company makes all kinds of shit and claims to get bunches of silver  I don't believe it. It's parent company listed 1.9 million ounces of gold last year and like 118 million ounces of silver which is like a 60:1 ratio though they are working with lead and tin ores.

Thu, 05/12/2011 - 14:37 | 1268825 Hephasteus
Hephasteus's picture

And looking through that website you posted at first majestic. They are processing lead and zinc ores at del torro. Haven't checked the others. So you can call it silver mine but it's making a bunch of lead and zinc like hundred of tons of it for that silver.

I wonder what every single radiotactive element eventually decays into. I wonder what it is. Could it be lead. Oh ya. They all decay down to lead. So I wonder what else you get in a lead and zinc mine.

Thu, 05/12/2011 - 19:53 | 1270105 XPolemic
XPolemic's picture

No one said that there are no pure silver mines. But the majority of silver comes from tailings of other ores.

For example, Discovery Metals has found a massive Copper deposit in Botswana, the copper content by weight is 1.4% (which is very high), but the ore also contains 17.3g/t of silver (as a bonus), which means that for every 34,400 tonnes of copper they extract from the ore, they will also get a tonne of silver.

Since they are digging the Copper out anyway, in a sense, the extraction cost of the silver is free. But there is not very much of it, and separating it from the ore/copper is definitely not free.

There just isn't that much silver on our planet. Silica on the other hand ....

Thu, 05/12/2011 - 19:58 | 1270120 akak
akak's picture

There just isn't that much silver on our planet. Silica on the other hand ....

And smelters definitely do NOT like silica!  In their silver, or in anything else.

Fri, 05/13/2011 - 08:39 | 1271206 XPolemic
XPolemic's picture

And smelters definitely do NOT like silica!  In their silver, or in anything else.

No, it floats to the top as slag. Although, sometimes human ingenuity knows no bounds. There are people who have even turned slag into a useful material.

Thu, 05/12/2011 - 20:19 | 1270186 Hephasteus
Hephasteus's picture

And when Llehman folded it had tons of yellowcake uranium on it's books.

They won't touch that mine. Because they don't give a shit about silver. They want to process the lead mines which give them uranium becasue they like threatening people with big bombs.

Exactly whyp jp morgan will go under. They can get the silver but can't be bothered with it cause it doesn't match thier other goals. Making plastic explosives, nitrocellulose based gunpowders. Copper jackedted lead bullets. You know the things banksters like.

Thu, 05/12/2011 - 13:24 | 1268473 Urban Redneck
Urban Redneck's picture

Minting or melting would never be included in a miners cost, gold is exported in either dore or dust and sold to refiners or industrial users.

Also you need to read the mining code and customs tariffs in the producing country for a specific mine, since none of them will allow it to be extracted and exported without way more $35/oz in royalties/taxes/customs duties. 

Thu, 05/12/2011 - 14:23 | 1268748 Rynak
Rynak's picture

.....oh shit.....

Thu, 05/12/2011 - 13:57 | 1268650 fuu
fuu's picture

It only costs $5 to remove from the ground.

Thu, 05/12/2011 - 14:38 | 1268837 akak
akak's picture

And the shit is fucking everywhere!

brawk brawk!

Thu, 05/12/2011 - 12:54 | 1268284 Cognitive Dissonance
Cognitive Dissonance's picture

At times the miners do not follow the PM (physical or paper) at all. Like over the past month or so.


Thu, 05/12/2011 - 12:55 | 1268306 Hedgetard55
Hedgetard55's picture


Thu, 05/12/2011 - 13:14 | 1268396 Bastiat
Bastiat's picture

One big reason for that is hedge funds long PMs and short miners. Nice mis-allocation of capital but hey, that's what our capital markets do best. 

Thu, 05/12/2011 - 13:23 | 1268451 Temporalist
Temporalist's picture

That isn't true CD...they go down only but not up (and doesn't that just make the most sense).

Thu, 05/12/2011 - 14:24 | 1268770 Cognitive Dissonance
Cognitive Dissonance's picture

That was good for an out loud laugh.

My assistant is always sticking her head in asking what I'm laughing about. I love ZH.

Thu, 05/12/2011 - 13:05 | 1268362 Fiat2Zero
Fiat2Zero's picture

Miners are currently a great play for shorts.  You'll see many miners with huge short interest, for their thinly traded shares.  Keep in mind if you want to use leverage to keep PMs looking overvalued and/or volatile, miners are another way to play this.

At a certain point, when gold and silver are not so niche the mining shares will rise and there should be a short squeeze.  Yes, I said niche, ask people how many of them own gold or silver and you will find the answer is zilch - unless they are on ZH or a central banker (and the central banker will lie).

Note that during the last gold rush there were mining shares that went from several cents (e.g. 0.03) to several hundreds of dollars (e.g. $500) very quickly.

That said, good fucking luck picking the winners, it's super tricky.  There do seem to be a bunch that are undervalued when one compares their proven reserves to what they are valued at - this may be a function of the shorts, and/or rising production costs (fuel).

Finally "silver mines" may not be the best play.  You should consider that silver is a by product of mining for something else (although perhaps this changes when the price of silver hits $50, not sure about this).  This may actually radically change valuation of say a copper mine.

Devil's Dictionary Definition of a "gold mine" : A hole with a liar standing next to it.

Mining shares aren't for the faint of heart, and it may pay to wait a while for a better moment.



Thu, 05/12/2011 - 13:10 | 1268389 Hedgetard55
Hedgetard55's picture


Thu, 05/12/2011 - 13:27 | 1268469 Temporalist
Temporalist's picture

The play is to find small successful miners and determine which look ripe for a buyout by the big miners who are exhausting their deposits and will need to replace them to keep growing.

Thu, 05/12/2011 - 13:55 | 1268636 tmosley
tmosley's picture

One must also keep in mind Mark Twain's definition of a gold mine.

That is: a hole in the ground with a liar in front.

Thu, 05/12/2011 - 13:48 | 1268588 bobby02
bobby02's picture

GLD was originally conceived and sponsored by the World Gold Council, which is made up of the world's largest gold miners. Somehow this fact is conveniently ignored by those who claim a big divergence between physical and paper prices.

Thu, 05/12/2011 - 13:56 | 1268645 tmosley
tmosley's picture

You saying miners wouldn't want to be able to make a tremendous amount of money by selling bits of paper, then collapse the vehicle, and have what they sell for a living increase exponentially in value?

Thu, 05/12/2011 - 14:06 | 1268672 bobby02
bobby02's picture

I'm saying miners want to make as much money as possible (like most people) and devised a vehicle to increase the cost of gold by making it an accesible investment to a wider audience, i.e., increasing demand for gold and thus the market clearing price.


I don't believe such stories about "selling bits of paper, then collapse the vehicle," but if it were true, it would be the banks that operated the vehicle that profited, not the miners.

Thu, 05/12/2011 - 14:39 | 1268857 tmosley
tmosley's picture

The miners are the ones who have the gold.  

Further, if they set out to increase the cost of gold by making it available to a wider audience, then they have failed miserably.  Some 1% of all financial wealth in the world is in gold, including GLD and co.  Prior to 1980, this number averaged around 20%.  Indeed, the number of ounces of gold held privately hasn't even changed from the absolute low, when gold was about 0.2%.  All the increase has been from the rise in price.

The numbers don't make sense.  Unless someone can find me an interpretation that makes sense, I have to cry foul.

Thu, 05/12/2011 - 15:10 | 1269007 bobby02
bobby02's picture

I agree with you. The numbers you quote make no sense whatsoever.

The miners' trade association estimates invesment demand rose from under 200 tonnes in 2000 to over 1200 tonnes in 2009, or from 4% of total demand to over 45%, in large part due to ETF type products.

Looks pretty successfuly to me.

Thu, 05/12/2011 - 16:38 | 1269432 tmosley
tmosley's picture

Yes, but it doesn't note the decline of ownership of actual bullion, along with mining shares.  In addition, the other variable is the explosion of other financial instruments that have sucked up a huge portion of the total invested capital in the world.

Thu, 05/12/2011 - 12:50 | 1268265 chinaboy
chinaboy's picture

In China, physical price is consistently higher than the T+D paper price. An echo of the SLV NAV discount.


The shorts need to maintain the downward trend in order to not being biten by their own momentum. Or they need to keep a pile of physical in order to be safe.


Nothing changed in terms of fundamental. A lot of people are ready to buy at the right price.

Thu, 05/12/2011 - 12:55 | 1268304 Fiat2Zero
Fiat2Zero's picture

Change "In China," to "In the real world".  Fixed.

Thu, 05/12/2011 - 12:52 | 1268268 Quinvarius
Quinvarius's picture

I don't think that data is accurate.  I am not a fan of SLV.  But I don't think that is a real time NAV.

Thu, 05/12/2011 - 12:49 | 1268275 lolmao500
lolmao500's picture

Anyway to sue those bastards at CME?

Thu, 05/12/2011 - 13:03 | 1268330 nope-1004
nope-1004's picture

Yes, calculate your time and cost in legal fees and go buy physical with it.  They can't print the physical shit they claim they have.  It's all a lie.  The more people buy, the tighter the noose gets.


Thu, 05/12/2011 - 13:07 | 1268371 Fiat2Zero
Fiat2Zero's picture

Yes this.  Every time they lower the price, it goes on sale.  Price controls produce shortages and black markets, and eventually fail.

Keep buying the physical.

Thu, 05/12/2011 - 13:31 | 1268497 bobby02
bobby02's picture

You do realize that on the CME, silver FUTURES trade, whereas SLV is a CASH equity product that trades on the NYSE.


Forgive me for introducing facts. I know it's not appropriate but I can't help myself sometimes.

Thu, 05/12/2011 - 12:55 | 1268298 Johnny Lawrence
Johnny Lawrence's picture

Notice how as the equity market rises, so do commodities, including gold & silver.  If the equity market finally crashes, commodities are going with it.

Thu, 05/12/2011 - 12:55 | 1268300 Fiat2Zero
Fiat2Zero's picture

Perhaps their NAV itself needs to be discounted to "risk of not being available when you need it due to something in the fine print of the prospectus".

Thu, 05/12/2011 - 12:56 | 1268303 Math Man
Math Man's picture

This is the biggest piece of garbage analysis I have ever seen on ZH:  The NAV of SLV is .9747 ounces.  The NAV in dollars is whatever the spot price is an any instant in time.

Right now, my screen shows spot at $34.21, making the NAV of SLV $33.34

SLV just ticked at $33.35.


So much for the discount.

Thu, 05/12/2011 - 13:01 | 1268319 Rynak
Rynak's picture

Oh, go die already methman.

You can be funny at times, at the right dose. Thats not the case here and today. Fuck off!

Thu, 05/12/2011 - 13:18 | 1268424 luk427
luk427's picture

I found mathman's previous job' stunt driving in the Thunder bolt and Lightfoot movie. He sucked in too many carbon monoxide fumes. How else could you stick up for the SLV.

Thu, 05/12/2011 - 13:09 | 1268383 Fiat2Zero
Fiat2Zero's picture

C'mon Meth you shill.  Your Rothschild masters expect more entertainment for the peanut gallery.  Otherwise no more crumbs from the Master's table for you.

Quality counts.

Thu, 05/12/2011 - 13:30 | 1268487 vas deferens
vas deferens's picture

Math -  Thanks for you input in this you seem correct.

Thu, 05/12/2011 - 14:40 | 1268849 mick
mick's picture

Why do you even bother?  The "buy physical at any price" crowd are beyond reason.



Thu, 05/12/2011 - 14:52 | 1268910 ZeroPower
ZeroPower's picture


Thu, 05/12/2011 - 12:56 | 1268309 TradingJoe
TradingJoe's picture

Stop whining and trade, the "bounce" is coming:))

Thu, 05/12/2011 - 13:01 | 1268338 Chuck Norris
Chuck Norris's picture

I'm buying ammo instead of silver this week. 525 rounds of Federal 00 buck (in mil style cans) for $300 to my door. 

What will be worth more when SHTF?  The ammo or the silver I could have bought today?

Thu, 05/12/2011 - 13:06 | 1268367 camaro68ss
camaro68ss's picture

I already got about 4,000 round of different ammo for different guns, food, water, and all that good stuff came first. Now its Buy silver time for me

Thu, 05/12/2011 - 13:06 | 1268368 tmosley
tmosley's picture

Suggest reloading equipment.  Shotgun shells are super easy to reload.  Makes a nice "SHTF job".  Best buy a lot of primers.

Thu, 05/12/2011 - 13:11 | 1268380 Chuck Norris
Chuck Norris's picture

Good advice. 

Then I suppose I'll just sell the reloads for silver...

Thu, 05/12/2011 - 13:13 | 1268408 tmosley
tmosley's picture


Thu, 05/12/2011 - 13:53 | 1268611 Urban Redneck
Urban Redneck's picture

Just be sure and send me your physical address before doing anything smart like violently shaking the primers or storing them anywhere near a source of high heat or possible electrical sparks/arcs. Seriously, there is a good reason explosive day boxes are made of PLYWOOD. The powder is actually very stable and not a big concern, but thousands of primers can pose a problem if not properly looked after.

It actually costs less than $5/oz to dig out your silver bug neighbor's rubble!

Thu, 05/12/2011 - 13:58 | 1268654 tmosley
tmosley's picture

Sorry, reloading equipment and materials are kept separately from everything else, for this very reason.

Thu, 05/12/2011 - 13:10 | 1268373 Burnbright
Burnbright's picture

Yeah thats why I bought reloading equipment, lead etc cause i doubt it will be available in the future. Love gold and silver but some stuff is going to run out fast such as ammo. 

Thu, 05/12/2011 - 13:16 | 1268405 NidStyles
NidStyles's picture

Depends, how much range do you think you'll get from buckshot compared to a 7.62 or 5.56?

Thu, 05/12/2011 - 14:07 | 1268688 dussasr
dussasr's picture

The range for buckshot is fine inside the house.  Generally better than 5.56.  It's best to have both tools and use the right one for the right job!

Thu, 05/12/2011 - 13:23 | 1268456 Hacked Economy
Hacked Economy's picture

I have a bit of everything (ammo, PM, food, clothing, etc.), so I'm balancing out my purchases from here on out.  Picked up another 75 rounds of 00 buckshot last week, and a dozen SAEs this week, etc.

Next week it's off to Wally World to pick up more socks and shampoo!  LOL!

Has anyone here thought about acquiring FEMININE PRODUCTS as units of trade?  I know it may sound silly at first, but can you imagine how much half of the local population around you will suddenly become very interested in getting their hands on more of these as their own (limited) supplies run out?  Last year, there was a temporary distribution problem here in SoCal with the manufacturer of O.B. tampons for a couple of months, and they quickly were going on eBay for FIVE times their normal retail because so many women wanted them.

Just a thought.  :)

Thu, 05/12/2011 - 14:16 | 1268710 Smiddywesson
Smiddywesson's picture

Post holocaust medium of exchange:  Nip bottles of booze.  They are small, so you can make change.  And after a hard day or arson and rape, everybody wants them.  

Thu, 05/12/2011 - 14:16 | 1268712 dussasr
dussasr's picture

I keep hearing that over and over.   Why do people think that tampon factories will stop production just because the government is mismanaging the money/economy?  It makes no sense to me.  Tampons will continue to be made.  If there is a currency crisis and people can't afford factory made tampons then why would they be able to afford your stockpiled tampons that you want to barter away?

If this country runs out of tampons it'll be because "The Road" or "Mad Max" has broken out in which case you'll have a lot bigger worries - like being eaten by your neighbor.

Thu, 05/12/2011 - 15:09 | 1269001 Hacked Economy
Hacked Economy's picture

LOL!  I'm not talking about long-term, as I definitely don't believe in the Mad-Max version of collapse.  I subscribe to a more realistic scenario of three months' worth of disrupted distribution before financial order begins to be restored.  But even that short timeframe is enough to scare a lot of people.  Here in SoCal, I've personally lived through earthquakes and blackouts, and I know how people can get after only a couple of days.  Plus, most of my friends and family don't believe in (and don't practice) stocking up.  It was an uphill battle just to convince my own wife that we should have a bare minimum of at least a month's worth of supplies (food, water, toiletries) on hand.

When we were at Walmart and I suggested we buy three months' worth of feminine supplies for her just in case, THAT'S when it became a personal issue for her, and she finally realized it was something she'd feel good having in storage just in case.

'Course, if you wanna store something else like liquor or ammo for trade instead, it's your prerogative.  Ammo for the guys, pads for the ladies, and perhaps booze for both.  :)

Thu, 05/12/2011 - 16:08 | 1269294 Downtoolong
Downtoolong's picture

I have a bit of everything (ammo, PM, ......

I hear it takes a silver bullet to kill a JPM trader.



Thu, 05/12/2011 - 13:03 | 1268345 Quinvarius
Quinvarius's picture

Check out ZSL's tracking error today.  Holy Moses.

Thu, 05/12/2011 - 13:05 | 1268360 Bob Sacamano
Bob Sacamano's picture

Will say AGQ and ZSL are a little out of whack too today (after both tracking 2x spot silver fairly well these past few months).  AGQ is down 8% on the day while ZSL is down 2%. 

Thu, 05/12/2011 - 13:09 | 1268386 Burnbright
Burnbright's picture

Haha yeah just saw that. LOL. Apparently they don't want people making money on silver trade at all /sarc

Thu, 05/12/2011 - 13:30 | 1268422 Quinvarius
Quinvarius's picture

Maybe someone finally did what they had to do and got a monkey off their back.  Or maybe they somehow got affected by the margin changes.

Do NOT follow this link or you will be banned from the site!