There is a simmering problem developing in the precious metals market. Before it becomes a wild fire, I want you to be aware of it. The iShares Silver Trust (NYSEARCA:SLV) is an ETF that owns silver bullion equal to the capitalization of its shares. As the spot price of silver fluctuates, so does the price per share of SLV. All good so far.
However, do they really own silver equal to the capitalization of the ETF? There have been questions about the integrity of SLV for at least a year, but most were treated like “black helicopter” sightings. The questions are gaining weight, and being made with more certainty.
J.P. Morgan (NYSE:JPM) is the custodian for SLV. They are the largest player in the silver market. What many don’t know is that JPM plays the silver market up and down. They are one of the largest short sellers of silver on the futures market. If that sounds like manipulation, maybe it is.
I have read two articles in the last month that question SLV’s integrity. This is why I think you need to have exposure to silver. If questions get louder and more frequent, SLV could collapse. This would throw panic in the market. And panic means the price of silver will go through the roof. SLV is supposed to hold roughly three-fifths of the total world stock of silver. Many believe they do not have it. Imagine what happens if there is some funny business in the inventory.
Did you know that SLV shares can be used to settle contracts on the COMEX futures exchange? Did you know that we do not mine as much silver as the world uses, and have not for years? Did you know there is less silver above ground than gold?
Silver already moves more than gold, good and, bad. When gold goes up 1%, it is not uncommon for silver to go up 2%. The same happens going down.
Silver is the poor man’s precious metal, and an industrial metal since it is used in manufacturing because it is a great conductor for electricity.
As silver increases in price, the possible fraud at SLV is more likely to be exposed. One article that you may want to read for additional research is Zero Hedge’s, “Multiple Anomalies Detected in Silver ETF”
Another article questions SLV as a legitimate investment.
Gold and Silver have rallied out of fear that we are facing inflation. We surely are, just not yet. It is hard to have inflation, with high unemployment, and a struggling economy. The weak dollar is also contributing to higher prices for precious metals. When dollars are worth less, it takes more of them to buy a commodity or precious metal that is priced world-wide.
If the economy does not recover as quickly as current market optimists believe, precious metals may take a dive. This is when you need to be greedy with silver.
Disclosure: No Positions