It is almost 100% certain that SLV is not even close to being fully backed by silver for which SLV holds title…
CNBC interviewed Goldman Sachs’ Jeff Currie – the head of global commodity research at GS – regarding the potential for the silver market to be squeezed. In the segment Currie made the argument that on the Comex: “the shorts are the ETFs – the ETFs buy the physical they turn around and they sell on the Comex to be able to hedge that physical position like any other corporate” (the quote begins at the 1:24 mark):
As with my good friend and colleague, Chris Marcus, I had to replay Currie’s assertions several times, after falling off my chair laughing the first time I heard his words. Currie’s motive for making this assertion is unclear to me. However, he is either completely incompetent as a research analyst or intentionally lying to the public on this matter.
I’ve read the GLD and SLV prospectuses a couple times front to back in the past. I knew when Chris told me about the interview that Currie was full of shit. But, just in case the SLV prospectus was revised since the last time I perused it and the Sponsor inserted a provision to enable SLV to trade silver futures, I pulled the latest SLV prospectus from the iShares website. Here’s the provision dealing with the silver futures:
SLV is specifically forbidden from transacting in futures. Regardless, there would never be any reason for SLV to sell futures as a hedge. SLV is not hedge fund. It’s an ETF that enables investors to index the price action of silver.
None of the above has anything to do with the issue of whether or not SLV actually holds title to all of the bars it lists as being held by the Trust. I’ll have more on that topic when I have time to put together a proper analysis. I’ll just say that it is almost 100% certain that SLV is not even close to being fully backed by silver for which SLV holds title.