NYT: SILVER E.T.F HAS NO PHYSICAL SILVER IN Vaults AT ALL

[Ares]

"Compared with old-fashioned silver investing, an E.T.F. offers “safety and simplicity,” said Kevin S. Feldman, an iShares managing director at BlackRock. You can easily buy and sell shares and don’t have to worry about storage, he says.

ETF Securities in London also recently introduced a bullion fund: ETFS Physical Silver.


One of its selling points is price: its expense ratio is just 0.3 percent.

Before E.T.F.’s, silver, like all precious metals, presented obstacles for retail investors. Acquiring bars or coins often involved verifying purity, renting space in a vault and buying insurance. The other option, buying silver futures contracts, demanded a level of expertise that made stocks and bonds seem simple.

The jargon alone, involving oddities like “backwardation” (when a futures price is lower for delivery in distant months than for delivery in near months) and “contango” (when the price is higher for distant months than near ones) can seem like a joke played on the novice.

Futures E.T.F.’s free retail investors from having to master some of these intricacies. These funds buy contracts to provide exposure to a commodities market. In essence, a futures E.T.F. tries over the long term to replicate silver’s return without having to take possession of bullion. "

http://www.nytimes.com/2011/01/09/business/mutfund/09silver.html?scp=1&sq=SILVER%20PRICE&st=Search

[General of Darkness]

It's all a fricken scam, all designed and controlled by the jew.

[TheNocturnalEgyptian]

He mentions iShares, isn't this Apple's silver stock thing - I seem to remember them buying 120 million ounce in 2007 or so, and another 80 million ounces in 2008. Lotta bullion.

[Silver Shield]

This should be good for another buck tomorrow.

[Serpo]

They still "claim" to have the bullion to back it all up.....well perhaps not all....OK half then.......maybe not half either......they said they have it .....you can trust these guys,,,,,have they ever not lied before....I mean...ah forget it....

[Sparky]

Regard the iShares ETF (SLV), which is the largest:

"The iShares offering is a bullion fund. As investors plunk down their money, the sponsor, BlackRock, buys silver bars that are then stored in vaults in London. In December, those vaults held nearly 11 tons. BlackRock contracts with JPMorgan Chase to manage and guard the trove. Investors cannot visit, but they can see a list of the bars, recorded by serial number, online."

The other funds referenced in the article are "futures" funds, which evidently don't need to hold the silver.

Just trying to get the facts straight. I don't doubt that SLV has the silver the way many of you seem to. I think there's no way silver would have gone from $8 to $32 in just 2.5 years if this big fund wasn't taking physical silver off the market.

[chad]

i think they have to have some silver in the vaults for show, but i doubt the entire amount is there. probably closer to something like 25% to 50% of what they really say they have.

[woodman]

You must remember: These same people have been running the fiat empire since the days of the goldsmith bankers. They have been running fractional reserve scams since it became apparent to them that not all of the owners of the metal would take their metal at once. I don't think they know how to change their ways. Why should they. It is what they do. I seriously doubt they have all the metal to cover the reciepts. It would simply be out of character for them.

[Sparky]

You must remember: These same people have been running the fiat empire since the days of the goldsmith bankers. They have been running fractional reserve scams since it became apparent to them that not all of the owners of the metal would take their metal at once. I don't think they know how to change their ways. Why should they. It is what they do. I seriously doubt they have all the metal to cover the reciepts. It would simply be out of character for them.


Given that SLV is relatively new, it wouldn't seem worth it this early in the game for them to screw around with inventory, putting the integrity of their business model at risk. Maybe at some point they'd do this, perhaps during the blowoff/panic stage when greed gets out of control, but not now. Just my opinion; I understand where you're coming from.

[mightymanx]

There is some fairly old obscure quote that fits this senario, I heard it was from some old crazy geezer with a toilet paper fetish.

"If you don't hold it you don't own it" or somethng like that

[Neuro]

Regard the iShares ETF (SLV), which is the largest:

"The iShares offering is a bullion fund. As investors plunk down their money, the sponsor, BlackRock, buys silver bars that are then stored in vaults in London. In December, those vaults held nearly 11 tons. BlackRock contracts with JPMorgan Chase to manage and guard the trove. Investors cannot visit, but they can see a list of the bars, recorded by serial number, online."

The other funds referenced in the article are "futures" funds, which evidently don't need to hold the silver.

Just trying to get the facts straight. I don't doubt that SLV has the silver the way many of you seem to. I
think there's no way silver would have gone from $8 to $32 in just 2.5 years if this big fund wasn't taking
physical silver off the market.
Perhaps, but SLV supposedly increased their holdings by about 60 million ounces while silver plunged from 21 to 8 in 6 months time. They supposedly off loaded some when silver was at it's bottom around $8.50 according to the chart, but there was still hardly any physical silver to be found on the market at that point. Right now SLV has a bit more than 10.000 tons around 330 million ounces, but the increase in their holdings have only been 20 million ounces from when it was in the high teens.

http://www.marketoracle.co.uk/images/2010/Apr/Zeal042310A.gif

If they do have what they say they have, they most likely don't buy it when they say they do...

[Twisted Titan]

They do have some silver but they make the redemption process absolutely riduclous

I think have have to have a certian amount invested in order to even be eligible for redemption.

Some like 10,000 or 100,000 shares ?

Then you have to fill out various questionares as to why you even neeed it.

Man......... I thank God My Momma rasied me with common sense.

[Sparky]

SLV buys and sells silver to keep the share price in line with the metal price. This does not mean they hold the most when the price is high and increasing, or hold the least when the price is low decreasing.

When silver was plunging in spot price, the demand for SLV was not decreasing at the same rate, so they had to issue new shares (which dilutes the share price) and buy physical silver with the proceeds to try to balance the share price. At the bottom of the spot price, the drop in share demand finally caught up and exceeded that for silver, so they had to sell some physical and use the proceeds to buy back some SLV shares. That's how it works.

Note they sold only about 7-8 million ounces over a couple of months; not very much. There was no physical silver to be had in small retail investor amounts (1- and 10-ounce) because a major refining conversion from small to large amounts had occurred to meet the large investor (like SLV) demand. Rounds and small bars were being melted and converted into large investment grade bars. That's what SLV was buying during their physical accumulation.

[Neuro]

Certainly sparky, but you claimed that the gain in silver was because of alleged SLV buying. I showed you that SLV supposedly bought 3 times as much silver when it plunged from 21 to 8.50 compared to when it gained from 15 to 33... Where do they get their silver from, btw?

[Sparky]

Certainly sparky, but you claimed that the gain in silver was because of alleged SLV buying. I showed you that SLV supposedly bought 3 times as much silver when it plunged from 21 to 8.50 compared to when it gained from 15 to 33... Where do they get their silver from, btw?


No, Neuro, I'm trying to explain that SLV buying/selling by it's custodians is NOT necessarily related to the price of silver, or the price direction of silver. It is totally about trying to balance share price with spot price.

When silver spot was plummeting, SLV shares were not decreasing in price fast enough to keep up with the spot price decline. So the custodians issued new shares and sold them to the market, and used the proceeds to buy physical. They bought a boatload of silver during the plummet because SLV investors were not dumping their shares fast enough to cover the drop in spot price, so they had to continue to issue shares and accumulate physical to rectify the imbalance.

It took me a while to completely grasp this. The best explanation I found was in this essay by Adam Hamilton:

http://www.zealllc.com/2010/slvdiv.htm

Here's the summary explanation:

This is due to the innate mechanics all ETFs share. Any ETF intending to track an underlying asset must actively shunt capital to and from the actual underlying asset to equalize supply-and-demand differentials between the ETF itself and the underlying asset. In SLV’s case, its share price is determined by the real-time supply and demand of its shares. If stock investors as a whole are buying more SLV than they’re selling, its price rises. If they are selling more than they’re buying, its price falls.

But SLV is explicitly designed to track the silver price, to give stock investors the functional equivalent of silver exposure in their portfolios. And silver has its own unique supply-and-demand profile totally independent of SLV’s. At any given moment if there is more silver demanded than supplied, its price will rise. And if there is more silver offered than wanted, its price will fall. The only way to synchronize the independent supply-and-demand profiles of SLV and silver is through active ETF management.

SLV’s custodians equalize these different profiles by shunting any differential ETF supply or demand directly into physical silver bullion itself. This is the only way tracking ETFs can function, and SLV’s efficiency in tracking silver is perfect. When SLV demand is running higher than silver demand, SLV shares threaten to decouple to the upside. To prevent this, SLV’s custodians issue new SLV shares to meet the marginal demand and use the cash raised to buy more physical silver bullion.

Conversely when SLV supply is greater than silver supply, SLV shares will decouple to the downside. Of course any decoupling will destroy this ETF’s tracking and scuttle its mission. To prevent this scenario, SLV’s custodians buy back this ETF’s shares to sop up the excess supply. They get the cash to do this by selling some of the physical silver bullion they are holding in trust for stock investors. The net impact is excess stock-market demand or supply is shunted directly into physical silver itself.


As for their source, they get their silver from the distributors of refined bars. When the silver price was plummeting and you and I were trying to buy rounds and small bars at $8/ounce, we couldn't find any. There were two reasons. One was that dealers were holding back from selling at that price. My dealer told me flat out that he wasn't taking his silver out of the vault at that price. But the second reason is that the small bars and rounds that were on the market were being shipped to the refiners for melt and production of large investment size bars that the likes of SLV were buying during the price drop.

I apologize for such a long post...

[Neuro]

As for their source, they get their silver from the distributors of refined bars. When the silver price was plummeting and you and I were trying to buy rounds and small bars at $8/ounce, we couldn't find any. There were two reasons. One was that dealers were holding back from selling at that price. My dealer told me flat out that he wasn't taking his silver out of the vault at that price. But the second reason is that the small bars and rounds that were on the market were being shipped to the refiners for melt and production of large investment size bars that the likes of SLV were buying during the price drop. So you are saying that instead of selling small silver bars and rounds with a 30-40% premium, distributors preferred to send their small bars to a refiner and get 90% or so of spot, so that SLV could fill their coffins? And other distributors preferred not to sell at all...

This explanation seems a bit contrived, don't you think?

[Sparky]

As for their source, they get their silver from the distributors of refined bars. When the silver price was plummeting and you and I were trying to buy rounds and small bars at $8/ounce, we couldn't find any. There were two reasons. One was that dealers were holding back from selling at that price. My dealer told me flat out that he wasn't taking his silver out of the vault at that price. But the second reason is that the small bars and rounds that were on the market were being shipped to the refiners for melt and production of large investment size bars that the likes of SLV were buying during the price drop. So you are saying that instead of selling small silver bars and rounds with a 30-40% premium, distributors preferred to send their small bars to a refiner and get 90% or so of spot, so that SLV could fill their coffins? And other distributors preferred not to sell at all...

This explanation seems a bit contrived, don't you think?

The local dealers keep themselves liquid by dealing with regional dealers. The regional guys are the ones selling to the refiners in bulk. They don't work with the premiums of the local guy; they deal in small margin large volume.

Here's probably what happened. Large scale investors (like SLV) initially pull the price up during these uplegs. When this makes silver ramp up quickly, like when it first went to $20 a few years ago, it draws a lot of RETAIL SELLING to dealers. Dealers do not want to hold physical silver at peak prices. They know their regional guy will pay them $19. So they pay you $18 and immediately dump it to the region, assuring and immediate profit without risk. (If they do hold the silver, they will hedge this by actually shorting SLV, further complicating the relationship). The longer this goes on, the more silver accumulates with the regional guy; with the buy demand coming from investors, they're the ones who make profit by selling to refiners who can then make the investment grade bars.

When the investors go to take their profit off the table (sell), they dump the investor bars in large quantities. Do you remember when silver dropped to $8, you could buy 100-ounce bars at Apmex, but not 1-oz and 10-oz? I think that's what was going on.

[mick silver]

They know their regional guy will pay them $18. So they pay you $19 and immediately dump it to the region ... this part i dont unstand sparky ... how can the dealer stay in business if hes saling at a loss ?

[Sparky]

They know their regional guy will pay them $18. So they pay you $19 and immediately dump it to the region ... this part i dont unstand sparky ... how can the dealer stay in business if hes saling at a loss ?


Oops, because I typed that backwards! I'll go fix it! Thx.

[Neuro]

So while SLVs custodian JPMorgan were shorting the crap out of the Silver market in 2008, with the aid of taking over the previous long Bear Sterns SLV was buying vacuuming with both hands physical Silver. Forget about 50% or even 25%, SLV doesn't have ANY physical silver. Certainly JP Morgan has hired a few creative writers to convince people that they are all in, but in reality it is a great fraud, SLV doesn't have anything but paper silver...

[Silver Shield]

This should be good for another buck tomorrow.


Called that one...

Now on to $50 by the end of March

and the Crimex in ashes...

[Buddha]

This should be good for another buck tomorrow.


Called that one...

Now on to $50 by the end of March

and the Crimex in ashes...



if we see $50 silver at the end of March I will start crying.

[slvrbugjim]

Silver Sammy

Says it is all coming down now

http://www.youtube.com/watch?v=DkuXhJDBAhw

[Serpo]

SLV.........So Little Value ..... ;D