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

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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?

ZeroPower's picture

No. 

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.

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.

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.

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.

NoBull1994's picture

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

spartan117's picture

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

tmosley's picture

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

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.

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.

KidDynamite's picture

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

http://kiddynamitesworld.com/zerohedge-sets-a-new-personal-record-in-dum...

 

 

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.

 

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...

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. 

tmosley's picture

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

That's what I call LOGIC!

Ethics Gradient's picture

I understood your point and my IQ is 6.

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.

oogs66's picture

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

Smartie37's picture

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

kalasend's picture

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

augie's picture

This is gonna be a bloodbath.

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.

 

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....

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

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.

GG

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

http://www.zerohedge.com/article/war-speculators-goes-global-shanghai-go...

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.

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.

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.

 

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.

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..."

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... :)

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.

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? 

SheepDog-One's picture

Have to wonder who sold them?

ZeroPower's picture

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

I did it by Occident's picture

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

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?

 

I did it by Occident's picture

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

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

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..

 

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

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.

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:

http://www.youtube.com/watch?v=vs7-yDO6i9Y

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

http://thesilvergoldhedge.blogspot.com/2011/05/market-manipulation-not-t...

buck4free's picture

Silver chart starting to look like Case-Schiller. lol

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.

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.