Want to Own Silver? Forget About SLV 88 comments
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As a writer, it's always a disappointment when something which you see as being among the best or most important examples of your work receives less attention than other pieces. Sometimes this can be due to nothing more than a poorly-worded title, however, what it usually means is that a writer did not do a good enough job of explaining or highlighting the material which is of greatest significance.
It is with this in mind that I have decided to repeat a discussion which I had focused on in a previous commentary. In that commentary, I discovered what I believed (and still believe) to be the most important piece of data I have unearthed since I started writing about this sector.
It came from one, simple graph – on global silver inventories, over roughly a 50-year time horizon. The chart was compiled by the CPM Group, a private consultancy that is one of two quasi-official sources for supply and demand data in the precious metals sector, which we all must rely upon.
It shows a dramatic decline in inventories, which began in 1990, when global silver inventories totaled approximately 2.2 billion ounces. Inventories fell by more than 90% to less than 200 million ounces. The decline apparently ended in 2005, when (as the chart shows) inventories began trending higher, to approximately 600 million ounces, as of the beginning of this year.
This is roughly triple the total inventories for 2005, although still little more than a quarter of what was available in 1990. However, what immediately grabbed my attention was a note attached to the graph: “Inventories include Silver-backed Exchange Traded Funds (ETFs)”. I was flabbergasted to see this, for two reasons.
First of all, there could be no possible justification for adding this silver to global “inventories”. When (for example) a person buys a unit of SLV, the world's largest (so-called) bullion-ETF, you are supposedly buying one ounce of silver – which SLV claims to be holding for you, virtually free of charge.
By definition, that ounce of silver is now privately-held, with SLV acting as both custodian and trustee on your behalf. In theory, at least, that means that you are the only person with the legal right to sell that silver. Unless and until you decide to sell that ounce of silver, that silver is officially off the market – or is it?
As most holders of SLV should know, SLV holds no silver. Instead, it has custodians who (supposedly) hold all this silver on their behalf – again, virtually free of charge. These are the very same bullion banks who have been accused (unofficially) by myself, and most other precious metals commentators of deliberately manipulating and suppressing the price of gold and silver – in order to conceal their reckless mismanagement of the world's financial system.
These are also the same bullion banks who officially hold the world's largest “short” positions. In the case of silver, the short positions of these bullion banks now total nearly 500 million ounces (according to the latest tally from Ted Butler) – and in proportionate terms represent the largest concentration of positions in the history of commodity markets (on either the “long” or “short” side). As Mr. Butler has pointed out on numerous occasions, this fact alone is compelling evidence of manipulation.
However, let me return to my point. The same bullion banks who are the largest “shorts” in the history of commodities also claim to be custodians of the vast majority of all the world's bullion-ETFs – a service which they are providing free of charge – to help small investors enter the silver market on the “long” side (getting suspicious yet?).
Apart from the entirely ludicrous notion of a banker doing anything for free, what kind of “short” would provide huge trading vehicles (free of charge) to facilitate the entrance of longs into the market? Again, the very idea completely defies rationality...unless these bullion banks are only pretending to hold silver for these funds.
If they were merely pretending to hold silver on behalf of the ETFs, then first of all this explains both how and why they could do it for free. In addition, if this silver is truly nothing more than “paper silver” as I have alleged on many occasions, then every dollar wasted by investing in this imaginary silver dilutes the total number of investment dollars invested into this sector. This would make bullion-ETFs the perfect weapon for these bullion-bank shorts and, indeed, is the only way that any rationality can be attached to this market and these numbers.
It also explains why virtually every ounce of ETF-silver is listed as for sale, as part of global “inventories”. SLV-holders can crow all they want about how they have lists of serial numbers, and pictures of bars, but what those pictures don't show is that on the back of every one of those bars, the bullion banks have attached a “for sale” sticker.
Anyone can walk up to these bullion banks, at any time, hand them the prevailing “spot” price, and buy your silver ETF. There are a few legitimate, bullion-ETFs – who actually buy and hold real bullion for their clients. You will immediately be able to separate these from the bogus ETFs – because they do not claim to be able to buy and hold infinite amounts of bullion, virtually free of charge.
The other point which is of huge significance is that this entire (supposed) tripling of inventories only occurred because the bullion banks (and the bullion-ETFs) have conned people into buying over 400 million 'ounces of paper', while pretending to be selling silver.
If you want to own silver, then buy real silver. Thanks to the manipulations of the bullion banks (including their massive scam with the bullion-ETFs), we can all still buy real silver at a ridiculously low price – for a very limited amount of time.
If you're buying a bullion-ETF, or holding a bullion-ETF, then very likely all you are holding is paper.
Disclosure: I hold no position in SLV or any bullion-ETF
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This article has 88 comments:
SLV would be decimated if a panic about its physical silver occurred. If some of the large custodians of SLV's physical silver begin to have problems acquiring silver for their short positions at some point in time...... Katie bar the door!!!!
Why take that risk? I want my paper silver for the opportunity to make me money. My insurance policy I take in physical form.
So how many investors are actually prepared to accept physical metal in lue of paper reciepts? I'll just take a stab at it and guess less than 1% of 1%, yeah 1 in 100,000 sounds about right.
Reality is there's no gold standard for US currency, no gold standard for gold, and no silver standard for silver. There's only fear and greed and we who prosper. Long SLV!
I agree that there is "no possible justification for adding this silver to global inventories" but I don't follow how that it means that "every ounce of ETF-silver is listed as for sale ... the bullion banks have attached a “for sale” sticker". Just because CPM Group has made a classification error on what is or isn't inventory doesn't make it available for sale. I would not be surprised if the CEF metal is included in CPM Group's inventory number along with SLV. I think CPM Group is just adding up all "known" or reported on piles of silver and saying that is inventory.
I switched to Swiss Bank ETFS Gold and Silver Trusts, SGOL and SIVR, based on their assertion they do biennial audits of the physical gold and silver of their bullion and post the bullion serial numbers on their web site and the Seeking Alpha article by Kim:seekingalpha.com/artic....
finance.yahoo.com/news...
I am not sure if I am running the same risks you and Kim have pointed out in your articles but the biennial audits and physical gold and silver held in Zurich vaults seemed better than the GLD and SLV options (no audits and bullion in New York and London).
Comments?
slowwhizz
DID YOU READ/UNDERSTAND PROSPECTUS?
On Sep 17 08:17 AM john1940 wrote:
> Is gold the same? I've used CEF because I thought they held bullion
> in the same amount as their stock issued. Now I wonder about GLD.
> Have to do more work.
If you buy and sell 100 shares of SLV, and profit $1000, this is reportable to the IRS.
If you buy and sell 100 American Silver Eagles, and profit $1000, the transaction is not reportable to the IRS. The rules change at 1000 ounce transactions and $1000 face 90% silver bags. (For this reason alone, COMEX 1000-ounce bars are an extremely stupid idea.) No metal transactions were reportable until the 1970s, when they made >30 ounce gold and >1000 ounce silver transactions reportable because of "the drug trade." (Always nice to have a straw man.) But that's another conspiracy article for Jeff... ;-)
As for silver inventories, the chart you show is "ready for sale" silver, correct? I just wonder how much private inventory is out there in the form of pre 1965 USA, pre 1968 Canadian, etc. coinage and other junk (silver sets, spoons.) Have you seen estimates published anywhere as to what this number is? It would be useful to have a ballpark figure, as this proposes upward resistance in silver price as more people sell Grandpa's coins at each prospective milestone price.
On Sep 17 09:53 AM Whippet wrote:
> Another reason to flee silver ETF's:
> If you buy and sell 100 shares of SLV, and profit $1000, this is
> reportable to the IRS.
> If you buy and sell 100 American Silver Eagles, and profit $1000,
> the transaction is not reportable to the IRS. The rules change at
> 1000 ounce transactions and $1000 face 90% silver bags. (For this
> reason alone, COMEX 1000-ounce bars are an extremely stupid idea.)
> No metal transactions were reportable until the 1970s, when they
> made >30 ounce gold and >1000 ounce silver transactions reportable
> because of "the drug trade." (Always nice to have a straw man.)
> But that's another conspiracy article for Jeff... ;-)
Yes, there is the need to get our terms straight. "Inventories", as you say, represent the amount of silver which is (supposedly) currently for sale. And as I pointed out, there is no way to justify including the PRIVATELY owned/held silver supposedly owned by ETF-holders as part of "inventories".
"Stockpiles" refer to the amount of silver which COULD come onto the market (if prices moved up to a high enough level). The person who has spent the most time doing research on this number is Ted Butler. He estimates "stockpiles" at roughly 1 billion ounces - which would still represent a 90% decline in "stockpiles" over the last 50 years.
There are no OFFICIAL sources for such data. Two private consultants (one in New York, one in London) who are BOTH rumored to have close ties to the anti-gold cabal are the only quasi-official sources of supply data. As I have pointed out before (especially with silver) some of their numbers are highly dubious.
On Sep 17 09:58 AM Whippet wrote:
> Jeff- I have a fundamental question you may know the answer to.<br/>As
> for silver inventories, the chart you show is "ready for sale" silver,
> correct? I just wonder how much private inventory is out there in
> the form of pre 1965 USA, pre 1968 Canadian, etc. coinage and other
> junk (silver sets, spoons.) Have you seen estimates published anywhere
> as to what this number is? It would be useful to have a ballpark
> figure, as this proposes upward resistance in silver price as more
> people sell Grandpa's coins at each prospective milestone price.
On Sep 17 09:06 AM RWP wrote:
> I own 400 shares SLV long. I never intended to own any silver or
> take ownership of the physical metal, nor would I be prepared to
> accept silver deliveris from AGQ or any gold security.
>
> So how many investors are actually prepared to accept physical metal
> in lue of paper reciepts? I'll just take a stab at it and guess less
> than 1% of 1%, yeah 1 in 100,000 sounds about right.
>
> Reality is there's no gold standard for US currency, no gold standard
> for gold, and no silver standard for silver. There's only fear and
> greed and we who prosper. Long SLV!
On Sep 17 10:07 AM doubleguns wrote:
> Monex informed me that they do not report anything to the IRS. This
> is news to me. Where can I find out the truth, I believe you!! Your
> info is always credible, but I would like to have something to reference
> when I question (waterboard) my broker.
On Sep 17 10:26 AM Jeff Nielson wrote:
> Hi Whippet.
>
> Yes, there is the need to get our terms straight. "Inventories",
> as you say, represent the amount of silver which is (supposedly)
> currently for sale. And as I pointed out, there is no way to justify
> including the PRIVATELY owned/held silver supposedly owned by ETF-holders
> as part of "inventories".
>
> "Stockpiles" refer to the amount of silver which COULD come onto
> the market (if prices moved up to a high enough level). The person
> who has spent the most time doing research on this number is Ted
> Butler. He estimates "stockpiles" at roughly 1 billion ounces - which
> would still represent a 90% decline in "stockpiles" over the last
> 50 years.
>
> There are no OFFICIAL sources for such data. Two private consultants
> (one in New York, one in London) who are BOTH rumored to have close
> ties to the anti-gold cabal are the only quasi-official sources of
> supply data. As I have pointed out before (especially with silver)
> some of their numbers are highly dubious.
1) Transaction costs. Purchases must be made CONSTANTLY, all day long - in order to buy the actual silver for unit-holders at the same price they bought their units at. Given the huge volatility with silver, it's not even feasible to restrict buying to once a day - since silver has had MANY daily moves of 5% or more.
2) Insurance/delivery costs
3) Storage/security costs. Obviously BILLIONS of dollars of silver require significant security to guard such a hoard. The U.S. government has an entire military battalion guarding Fort Knox - so no one can find out how much gold is NOT there.
If you think these costs are minimal, then answer this question: why do the small number of companies who hold their own bullion need to charge MANY times that premium for their own security/storage costs?
On Sep 17 09:18 AM Bron Suchecki wrote:
> You say "custodians of the vast majority of all the world's bullion-ETFs
> – a service which they are providing free of charge" but SLV has
> an expense ratio of 0.50%, some of which if I remember the prospectus
> correctly, is paid to the custodian. If SLV holders pay 0.50% how
> can it be considered "free". By what do you mean free?
>
> I agree that there is "no possible justification for adding this
> silver to global inventories" but I don't follow how that it means
> that "every ounce of ETF-silver is listed as for sale ... the bullion
> banks have attached a “for sale” sticker". Just because CPM Group
> has made a classification error on what is or isn't inventory doesn't
> make it available for sale. I would not be surprised if the CEF metal
> is included in CPM Group's inventory number along with SLV. I think
> CPM Group is just adding up all "known" or reported on piles of silver
> and saying that is inventory.
GTU and CEF are audited bullion funds with bars/ounces in your name verified to be in the vault.
My question is, has anyone compiled a list of ETF's which have verified audited bullion in their vaults vs. ones which are not audited. I have an interest in buying pure silver in an ETF form, and currently only trust CEF from a bullion standpoint, which forces me to buy roughly equal value gold with my silver. I'm looking for a pure silver ETF which is audited and has bullion in my name.
On Sep 17 11:05 AM Jeff Nielson wrote:
> Hi Bron. Just look at all that is SUPPOSEDLY covered by this 1/2%
> fee:
>
> 1) Transaction costs. Purchases must be made CONSTANTLY, all day
> long - in order to buy the actual silver for unit-holders at the
> same price they bought their units at. Given the huge volatility
> with silver, it's not even feasible to restrict buying to once a
> day - since silver has had MANY daily moves of 5% or more.
>
> 2) Insurance/delivery costs
>
> 3) Storage/security costs. Obviously BILLIONS of dollars of silver
> require significant security to guard such a hoard. The U.S. government
> has an entire military battalion guarding Fort Knox - so no one can
> find out how much gold is NOT there.
>
> If you think these costs are minimal, then answer this question:
> why do the small number of companies who hold their own bullion need
> to charge MANY times that premium for their own security/storage
> costs?
Ike said, "I am the President of the United States. I order you to stand down."
The guard responded, "Sir, with most respect. I can't allow you inside."
"Why," asked Ike.
The soldier pointed at Fort Knox and said, "Because there's nothing inside that building."
Ike shrugged, spun on his heels, and yelled back over his shoulder, "Double the guard!"
Maybe they still have our gold and haven't returned it yet.
Kinda the story about if you borrow $100,000 from your bank and cant pay it back YOU have a problem.
If you borrow $10,000,000 from your bank and cant pay it back, THEY have a problem.
On Sep 17 11:46 AM Mayascribe wrote:
> A long, long time ago, Ike visited Fort Knox. He approached the gate.
> A soldier saluted and said, "Sorry, Mr. President, I can't allow
> you to gain entrance."
>
> Ike said, "I am the President of the United States. I order you to
> stand down."
>
> The guard responded, "Sir, with most respect. I can't allow you inside."
>
>
> "Why," asked Ike.
>
> The soldier pointed at Fort Knox and said, "Because there's nothing
> inside that building."
>
> Ike shrugged, spun on his heels, and yelled back over his shoulder,
> "Double the guard!"
I was led to the GLD & SLV ETFs. Everything I read screamed, "stay far away." Virtually unauditable, the too low cost of holding, little things like that.
Then, I decided to apply a dose of logic and cause/effect.
If we invest in metals to hedge a collapse of our dollars, and the PMs are not in our hands but in someone else's hands, how would we take delivery of "our" PM in the event of a catastrophe?
The US government has confiscated private assets before and things were not as dire then as a total collapse of our currency.
So, I came to the conclusion that to invest in these funds was futility IF my goal was a safety net. Obviously if my goal was to just try and garner a return on my investments, then I would have looked at it differently. Though the fees/holding thing would still weigh heavily.
Now, as the unwinding of our monetary system begins to look more like a sure thing than a "what if," investing in anything that you cannot eat, touch or physically trade seems counterproductive.
I note how many on this site are heavily invested in foreign stock markets, ETFs and the like. Investors who hold paper in other countries are at double the risk of loss. Their "wealth" could be confiscated by either our government or the foreign government.
Again, if security in the event of collapse is the goal, foreign investments are no more secure than PM ETFs as I just cannot foresee a panicked, collapsed and scrambling government allowing private shipments into the country and your hands. Do we really think FedEx. London or China will be able to force our government to deliver citizens property? Come now.
If (when) the collapse our dollar (and our country) happens, foreign investments and any known PMs are going to be taken to help the government stay operational.
It has happened before and it can happen again.
As a result of these contingencies all my silver purchases have been touchable and safely hidden with no middle men to report me or stand in my way of taking possession.
What and where is the safest way to buy physical silver.
On Sep 17 10:26 AM Jeff Nielson wrote:
> Hi Whippet.
>
> Yes, there is the need to get our terms straight. "Inventories",
> as you say, represent the amount of silver which is (supposedly)
> currently for sale. And as I pointed out, there is no way to justify
> including the PRIVATELY owned/held silver supposedly owned by ETF-holders
> as part of "inventories".
>
> "Stockpiles" refer to the amount of silver which COULD come onto
> the market (if prices moved up to a high enough level). The person
> who has spent the most time doing research on this number is Ted
> Butler. He estimates "stockpiles" at roughly 1 billion ounces - which
> would still represent a 90% decline in "stockpiles" over the last
> 50 years.
>
> There are no OFFICIAL sources for such data. Two private consultants
> (one in New York, one in London) who are BOTH rumored to have close
> ties to the anti-gold cabal are the only quasi-official sources of
> supply data. As I have pointed out before (especially with silver)
> some of their numbers are highly dubious.
"In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of iShares Silver Trust (the “Trust”) at December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the periods presented in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)....
Our audits of the financial statements included examining, on a test basis, <b>evidence supporting the amounts and disclosures in the financial statements</b>, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, <b>assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk</b>. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions."
If you don't think they counted the silver, you are wrong.
This ISSUE is that the same bullion-banks who claim to be "custodians" for virtually ALL the world's bullion-ETF's are sitting with the largest "short" positions in the history of commodities.
These positions ALSO require physical metal to back them, and these positions are NEVER AUDITED.
It is totally facile to claim that bullion-ETF's are "fully-backed" when you are literally discussing only HALF of the equation.
It is totally naive to believe that with the bullion banks ONLY able to back EITHER their short positions OR the bullion-ETF's that they will choose to back the ETF's.
These bullion-banks have a long history of bullion-fraud - and a willingness to pay the tiny fines which represent only a small portion of the PROFITS they make on such fraud.
On Sep 17 01:30 PM Michael Murphy wrote:
> SLV is audited by PricewaterhouseCoopers one of the Big Four accounting
> firms.
>
> "In our opinion, the financial statements listed in the accompanying
> index present fairly, in all material respects, the financial position
> of iShares Silver Trust (the “Trust”) at December 31, 2008 and 2007,
> and the results of its operations and its cash flows for each of
> the periods presented in conformity with accounting principles generally
> accepted in the United States of America. Also in our opinion, the
> Trust maintained, in all material respects, effective internal control
> over financial reporting as of December 31, 2008, based on criteria
> established in Internal Control - Integrated Framework issued by
> the Committee of Sponsoring Organizations of the Treadway Commission
> (seekingalpha.com/symbo...)....
> Our audits of the financial statements included examining, on a test
> basis, <b>evidence supporting the amounts and disclosures in the
> financial statements</b>, assessing the accounting principles used
> and significant estimates made by management, and evaluating the
> overall financial statement presentation. Our audit of internal control
> over financial reporting included obtaining an understanding of internal
> control over financial reporting, <b>assessing the risk that a material
> weakness exists, and testing and evaluating the design and operating
> effectiveness of internal control based on the assessed risk</b>.
> Our audits also included performing such other procedures as we considered
> necessary in the circumstances. We believe that our audits provide
> a reasonable basis for our opinions."
>
> If you don't think they counted the silver, you are wrong.
On Sep 17 10:40 AM optionsgirl wrote:
> RWP: If they would audit and make the results public, they would
> be able to lay these fears to rest. Why don't they do that? If the
> physical metal isn't there, what would that tell you?
>
> On Sep 17 09:06 AM RWP wrote:
My own preference is 1-oz coins rather than bars, for two reasons. First, as Teresa points out, there is a strong possibility that we could move into the chaos of a post-fiat currency world - with an inevitable gap before a new, gold standard restores order to global financial markets.
In such a world, we may literally rely upon gold and silver as the only REAL currency for a period of time. Coins are clearly the best medium for exchange, and thus will likely command an even greater premium than they do currently.
Secondly, anyone buying gold bars runs the risk of being forced to pay future assaying costs of those bars BEFORE actually being able to spend them (since counterfeiting bars is much easier than counterfeiting coins).
Call me a pessimist, but I think it is all but certain that the banksters will try to "corner the market" in assaying precious metals bars AND gouge people with exorbitant charges - effectively clawing back much of the bullion holdings of ordinary people.
This leaves minted coins as the safest form of bullion holdings.
On Sep 17 01:25 PM Johnny Oxygen wrote:
> Jeff.
>
> What and where is the safest way to buy physical silver.
Check.
Governments are concerned that precious metals will be used instead of their fiat currency, on the black market, and currencies will be affected when people begin to favor precious metals and no tax is paid on the transaction. Also, it is in the interest of governments with fiat currencies to contain the prices of precious metals, so their currency manipulations are not apparent. Just look at historic gold, silver and oil prices since the seventies to see how much purchasing power the dollar has lost.
On Sep 17 01:47 PM Jeff Nielson wrote:
> Hi Johnny.
>
> My own preference is 1-oz coins rather than bars, for two reasons.
> First, as Teresa points out, there is a strong possibility that we
> could move into the chaos of a post-fiat currency world - with an
> inevitable gap before a new, gold standard restores order to global
> financial markets.
>
> In such a world, we may literally rely upon gold and silver as the
> only REAL currency for a period of time. Coins are clearly the best
> medium for exchange, and thus will likely command an even greater
> premium than they do currently.
>
> Secondly, anyone buying gold bars runs the risk of being forced to
> pay future assaying costs of those bars BEFORE actually being able
> to spend them (since counterfeiting bars is much easier than counterfeiting
> coins).
>
> Call me a pessimist, but I think it is all but certain that the banksters
> will try to "corner the market" in assaying precious metals bars
> AND gouge people with exorbitant charges - effectively clawing back
> much of the bullion holdings of ordinary people.
>
> This leaves minted coins as the safest form of bullion holdings.
>
Why take two risks for one bet.
On Sep 17 01:42 PM RWP wrote:
> OptionsGirl: I suppose if the physical metal was not there my basic
> instinct would be to worry. I'm not worried because I feel that this
> ETF moves up and down with the price of silver not because the silver
> they do or don't own is worth more or less. Now that you pointed
> it out, I could see there may be a flaw in my logic. So answer me
> this: Why is it so important for SLV to be based on actual units
> of silver? Can't we simply use SLV to bet on direction?
On Sep 17 02:53 PM doubleguns wrote:
> That is the only way you should play SLV (direction) just remember
> that if SLV has an issue with the physical silver, a run on your
> stock could ensue because a lot of people bet on SLV physical holdings
> not direction. Find another player for direction without that risk
> to your investment.
>
> Why take two risks for one bet.
If you want to own silver or gold metal, own the metal.
If you want to trade SLV and GLD, trade them. After all, they go up and down in value like any other stock. Can you take your AAPL stock to Cupertino and demand hard assets in exchange? Of course not. But it still has value as a trade.
That said, the actual danger here is that some (maybe most, maybe not) owners of these securities are under the illusion that it's the equivalent of owning metal. And if and when that illusion is destroyed, there could be a very big "pop" as the bubble bursts. Even so, the convenience of trading the securities is a reasonable value for some risk, if you're not staking your life savings on them.
Now it occurs to me that that danger applies not only to SLV and GLD, but to ALL the ETFs managed by iShares and SPDR (and probably DB, which I assume is in the same game). That is a lot of risk to a lot of funds. How are you going to invest in Brazil, if EWZ is at risk of going down when SLV is exposed as fraudulent?
It does give one pause.
Silver coins......
Any preference between USA, Canadian, Austrian?
The same question for gold coins, but throw in South African...
As for the follow-up question on which coins to buy, I don't think that's a big issue. I'm Canadian, and my understanding is that the Canadian mint puts out SLIGHTLY purer coins than other mints - so I'm happy to buy those.
My guess is that you will probably pay a slightly smaller premium by sticking with your own national mint.
BTW, other people have mentioned buying "junk" silver and that is certainly the cheapest way to get your hands on the real metal.
On Sep 17 02:02 PM Johnny Oxygen wrote:
> Any suggestion on the best place to buy silver bullion?
seekingalpha.com/insta...
Since I do not have any vested interest in SLV, I could not spend more time than I already did in scrutinizing the bars list. If you hold a large position in SLV, then it is up to you to spend your time to exam the list, because if this is indeed a PONZI SCHEME, then it is your money to lose, not mine.
www.APMEX.com
is one of many possible places to buy physical precious metals.
goldismoney.info/forums/
is a popular discussion forum on matters related to precious metal investments.
www.usmint.gov/mint_pr...
On Sep 17 05:38 PM Jeff Nielson wrote:
> I prefer local coin dealers, so I can actually see the coins I receive.
> Next best would be established dealers like Kitco, although with
> shipping that is usually a more expensive option.
I also have problems about owning the physical metal. Number 1: How to secure it. Number 2: if the system tanks and money is worthless then how would I safely redeem the physical metal? I mean if this scenario did occur presumably there would anarchy! When it became known I own the metals I think I would become a target! I buy and diversify with miners and other metal related stocks. I am up 40% with one miner and 20% with another. I am also down considerably with a small penny stock miner that I hope has a future. I guess that is why I diversify isn't it?
My point is that I think the industry that brings the precious metal to us does better than the physical stuff. I began trading in February 09! I bought SLV to hedge against inflation. At the end of the day it has worked as I hoped. However, if I knew then what I know now I believe I would have bought miners too! Better late than never. I still would have SLV because I like the volume it trades at which lends some liquidity to my funds in time of need!
In closing I have heard the "bullets, toilet paper and cigarettes" would be more valuable than almost anything should the system fail and anarchy ensue! My guess is all of those would be easy to secure and draw little attention from thieves. At least, that is, until Armageddon occurred and they discovered you had it. Then I would have the same worries as if I owned Gold! (smile)
Long: SLV, NGD, PZG, UNCO
On Sep 17 08:17 AM john1940 wrote:
> Is gold the same? I've used CEF because I thought they held bullion
> in the same amount as their stock issued. Now I wonder about GLD.
> Have to do more work.
"There are a few legitimate, bullion-ETFs – who actually buy and hold real bullion for their clients. You will immediately be able to separate these from the bogus ETFs – because they do not claim to be able to buy and hold infinite amounts of bullion, virtually free of charge."
If it's so easy, why didn't you list which of the bullion ETFs are the legitimate ones? So many of the articles on SLV talk about good and bad ETFs, but just hammer SLV without actually listing any of the good ones. Could you post a comment telling us which ones you consider to be legitimate? Thanks!
I'm on the same wavelength as yourself. Most of my portfolio is invested in the miners, in the knowledge that they are producing a hard asset. While they could become illiquid in a severe financial crisis, they do not become worthless.
On the other hand, when you ask "what could I redeem these metals for?" you actually have things reversed. Back before our society FORGOT what "money" actually was, the question would have been, "what can I redeem these scraps of paper for?"
Gold and silver definitely have futures in our society as they have for thousands of years. It's the bankers and their paper "money" whose futures are uncertain.
On Sep 17 08:05 PM TheHague wrote:
> I have heard that both SLV and GLD have inventory accountability
> issues! It is just a matter of what you prefer. My "paper" SLV is
> up 20%!
>
> I also have problems about owning the physical metal. Number 1: How
> to secure it. Number 2: if the system tanks and money is worthless
> then how would I safely redeem the physical metal? I mean if this
> scenario did occur presumably there would anarchy! When it became
> known I own the metals I think I would become a target! I buy and
> diversify with miners and other metal related stocks. I am up 40%
> with one miner and 20% with another. I am also down considerably
> with a small penny stock miner that I hope has a future. I guess
> that is why I diversify isn't it?
>
> My point is that I think the industry that brings the precious metal
> to us does better than the physical stuff. I began trading in February
> 09! I bought SLV to hedge against inflation. At the end of the day
> it has worked as I hoped. However, if I knew then what I know now
> I believe I would have bought miners too! Better late than never.
> I still would have SLV because I like the volume it trades at which
> lends some liquidity to my funds in time of need!
>
> In closing I have heard the "bullets, toilet paper and cigarettes"
> would be more valuable than almost anything should the system fail
> and anarchy ensue! My guess is all of those would be easy to secure
> and draw little attention from thieves. At least, that is, until
> Armageddon occurred and they discovered you had it. Then I would
> have the same worries as if I owned Gold! (smile)
>
> Long: SLV, NGD, PZG, UNCO
I'm not a financial advisor. I don't invest in this type of vehicle - even the "safe" ones. As I've said, I prefer the "physical" metal. So I have little interest in doing people's investment homework - when if I should happen to make a mistake all I would get is sued for my troubles.
However, as it turns out, I've already written a follow-up to this piece, which I'll likely submit here in a day or two - which provides a specific alternative to SLV.
On Sep 17 09:24 PM Jabalong wrote:
> Jeff, I found this part of your article frustrating:
>
> "There are a few legitimate, bullion-ETFs – who actually buy and
> hold real bullion for their clients. You will immediately be able
> to separate these from the bogus ETFs – because they do not claim
> to be able to buy and hold infinite amounts of bullion, virtually
> free of charge."
>
> If it's so easy, why didn't you list which of the bullion ETFs are
> the legitimate ones? So many of the articles on SLV talk about good
> and bad ETFs, but just hammer SLV without actually listing any of
> the good ones. Could you post a comment telling us which ones you
> consider to be legitimate? Thanks!
Before I comment, just want to state upfront that I work for the Perth Mint, but I am speaking here in a personal capacity. While I’m speaking personally, obviously the ETFs are competitors to my employer’s business, both in respect of physical coins and bars as well as our own storage facility, so I’m not any apologist for the ETFs. Taking each of your points in turn.
1) Transaction costs. I note that SLV’s average Bid Ask Ratio is 0.08%. This is very tight but is not necessarily unprofitable for a market maker. You are right that the market maker must be purchasing (or selling) gold constantly as it sells (or buys) SLV shares. My experience with the Perth Mint’s ASX listed product (code: ZAUWBA) is that the market maker will simply set their stock exchange price for an ETF higher than their cost on the wholesale over-the-counter market and adjust this constantly during the trading day. This way they always make a profit on transactions, it is not a cost to them. If individuals bid prices under this than the market maker misses out on a trade. It is only where there are excessive buyers or sellers that the market maker’s prices will get hit.
2) Insurance/delivery costs. Delivery costs are effectively zero, as the metal is most likely already in the vaults as sellers of physical need to bring their metal to London to trade it. Insurance is a real cost, but are easily covered by 0.50%. Important to note that the metal is not fully insured, just the first couple of billion (I don’t think the prospectus says anything about the first loss limit of the insurance). Once you get to a certain size therefore, the insurance cost is a fixed cost, not variable.
3) Storage/security costs. These are fixed costs, once you have a vault and have secured it, every additional ounce does not result in any change in costs. Once you get to the point that you have covered these fixed costs, every ounce above that is pure profit and this is where custodianship can be highly profitable. At 280 million ounces, SLV is definitely there in my opinion. Storage business is a classic case of economies of scale, which is why smaller companies have to have higher storage charges (eg Perth Mint allocated silver is 2.5% pa).
I have been a bit brief on explaining the above, but my view is that they are making money with a 0.5% expense ratio. That is why I think the “free of charge” line of attack is not supported and you are better off focusing on your other criticisms.
Why not let Hugo Chavez run the Federal Reserve?
On Sep 17 01:30 PM Michael Murphy wrote:
> SLV is audited by PricewaterhouseCoopers one of the Big Four accounting
> firms.
>
However, m2c, invest in PM, speculate in SLV. PM long hold, SLV in and out of the market. Don't be the last one trying to get out at the top with SLV.
On Sep 17 01:30 PM Michael Murphy wrote:
> SLV is audited by PricewaterhouseCoopers one of the Big Four accounting
> firms.
>
> "In our opinion, the financial statements listed in the accompanying
> index present fairly, in all material respects, the financial position
> of iShares Silver Trust (the “Trust”) at December 31, 2008 and 2007,
> and the results of its operations and its cash flows for each of
> the periods presented in conformity with accounting principles generally
> accepted in the United States of America. Also in our opinion, the
> Trust maintained, in all material respects, effective internal control
> over financial reporting as of December 31, 2008, based on criteria
> established in Internal Control - Integrated Framework issued by
> the Committee of Sponsoring Organizations of the Treadway Commission
> (seekingalpha.com/symbo...)....
> Our audits of the financial statements included examining, on a test
> basis, <b>evidence supporting the amounts and disclosures in the
> financial statements</b>, assessing the accounting principles used
> and significant estimates made by management, and evaluating the
> overall financial statement presentation. Our audit of internal control
> over financial reporting included obtaining an understanding of internal
> control over financial reporting, <b>assessing the risk that a material
> weakness exists, and testing and evaluating the design and operating
> effectiveness of internal control based on the assessed risk</b>.
> Our audits also included performing such other procedures as we considered
> necessary in the circumstances. We believe that our audits provide
> a reasonable basis for our opinions."
>
> If you don't think they counted the silver, you are wrong.
Step up to the plate and hit the ball.
Do you suspect fraud? Then say so. Then explain your reasoning with telling details.
One of the key details would be tracking industrial demand for silver. For example, can you quantify the effect of billions of silver halide photos being replaced by digital imagery in just a few years? What else has effected industrial demand? And what of silver production?
Direct statements, hard facts, telling details, far fewer words.
On Sep 17 01:30 PM Michael Murphy wrote:
> SLV is audited by PricewaterhouseCoopers one of the Big Four accounting
> firms.
>
> "In our opinion, the financial statements listed in the accompanying
> index present fairly, in all material respects, the financial position
> of iShares Silver Trust (the “Trust”) at December 31, 2008 and 2007,
> and the results of its operations and its cash flows for each of
> the periods presented in conformity with accounting principles generally
> accepted in the United States of America. Also in our opinion, the
> Trust maintained, in all material respects, effective internal control
> over financial reporting as of December 31, 2008, based on criteria
> established in Internal Control - Integrated Framework issued by
> the Committee of Sponsoring Organizations of the Treadway Commission
> (seekingalpha.com/symbo...)....
> Our audits of the financial statements included examining, on a test
> basis, <b>evidence supporting the amounts and disclosures in the
> financial statements</b>, assessing the accounting principles used
> and significant estimates made by management, and evaluating the
> overall financial statement presentation. Our audit of internal control
> over financial reporting included obtaining an understanding of internal
> control over financial reporting, <b>assessing the risk that a material
> weakness exists, and testing and evaluating the design and operating
> effectiveness of internal control based on the assessed risk</b>.
> Our audits also included performing such other procedures as we considered
> necessary in the circumstances. We believe that our audits provide
> a reasonable basis for our opinions."
>
> If you don't think they counted the silver, you are wrong.
Your big claim: "there could be no possible justification for adding this (ETF) silver to global inventories. When a person buys a unit of SLV, that ounce of silver is now privately-held."
That's just goofy. What does your accusation of "now privately-held" mean? Look, if I buy the ETF SPY would you say the underlying stocks are now "privately held"? Dude, somebody owned it before, now another person owns it, what is all the ranting about?
Much ado about nothing!
As for security/storage costs, I'll happily concede (for purposes of argument) that no new storage space was created. This brings me back to my point about the ludicrous idea of a BANKER (holding a massive short position) SUBSIDIZING "longs" by providing free storage/security.
Even if you subscribe to that ludicrous fantasy, there is still the issue of the "opportunity cost" to banks. Precious metals are not the ONLY items in the world for which there is a demand for high-security storage. Will ANYONE suggest that banks will provide a FREE service for precious metals longs - rather than charge someone a fee for storing other valuable assets?
Try asking JP Morgan to store YOUR OWN precious metals for free - and listen to how hard they laugh at you.
On Sep 18 04:36 AM Bron Suchecki wrote:
> Jeff,
>
> Before I comment, just want to state upfront that I work for the
> Perth Mint, but I am speaking here in a personal capacity. While
> I’m speaking personally, obviously the ETFs are competitors to my
> employer’s business, both in respect of physical coins and bars as
> well as our own storage facility, so I’m not any apologist for the
> ETFs. Taking each of your points in turn.
>
> 1) Transaction costs. I note that SLV’s average Bid Ask Ratio is
> 0.08%. This is very tight but is not necessarily unprofitable for
> a market maker. You are right that the market maker must be purchasing
> (or selling) gold constantly as it sells (or buys) SLV shares. My
> experience with the Perth Mint’s ASX listed product (code: ZAUWBA)
> is that the market maker will simply set their stock exchange price
> for an ETF higher than their cost on the wholesale over-the-counter
> market and adjust this constantly during the trading day. This way
> they always make a profit on transactions, it is not a cost to them.
> If individuals bid prices under this than the market maker misses
> out on a trade. It is only where there are excessive buyers or sellers
> that the market maker’s prices will get hit.
>
> 2) Insurance/delivery costs. Delivery costs are effectively zero,
> as the metal is most likely already in the vaults as sellers of physical
> need to bring their metal to London to trade it. Insurance is a real
> cost, but are easily covered by 0.50%. Important to note that the
> metal is not fully insured, just the first couple of billion (I don’t
> think the prospectus says anything about the first loss limit of
> the insurance). Once you get to a certain size therefore, the insurance
> cost is a fixed cost, not variable.
>
> 3) Storage/security costs. These are fixed costs, once you have a
> vault and have secured it, every additional ounce does not result
> in any change in costs. Once you get to the point that you have covered
> these fixed costs, every ounce above that is pure profit and this
> is where custodianship can be highly profitable. At 280 million ounces,
> SLV is definitely there in my opinion. Storage business is a classic
> case of economies of scale, which is why smaller companies have to
> have higher storage charges (eg Perth Mint allocated silver is 2.5%
> pa).
>
> I have been a bit brief on explaining the above, but my view is that
> they are making money with a 0.5% expense ratio. That is why I think
> the “free of charge” line of attack is not supported and you are
> better off focusing on your other criticisms.
GLD is run by the same people with the same rules and "protection" given you by SLV. If you do not trust SLV to actually have the Silver, you can NOT trust GLD to have the Gold either. (I have my tradable holdings in CEF - I do NOT trust GLD or SLV.) Another benefit of CEF is simply that they keep you balanced between the two PMs so you do not have to worry about being over-balanced in one or the other.
On Sep 18 11:57 AM Jeff Nielson wrote:
> Puttster, you obviously need help with English before you can understand
> my commentary.
>
> By DEFINITION, an "inventory" represents the quantity of a good which
> is "for sale". By definition, a privately-held asset is NOT for sale,
> unless/until the owner of that asset officially lists it on the market.
>
>
> When I go to a coin dealer and purchase a 1-oz coin, my silver is
> NOT added to global inventories. I am still waiting for ANYONE to
> provide a rational reason why ALL ETF-silver is added to inventories
> but purchases of REAL silver are not.
>
> If you (or anyone else) can cite any legal authority for the custodians
> of SLV (and others) putting a "for sale" sticker on ALL silver (supposedly)
> held in trust for its private investors, please do so.
I do see them as a form of leverage that can be used to speculate on price, inventory etc. However, I would not consider them as a substitute for a physical holding. Let me say that I am a long time gold bug but not as an investor. I believe that long term a carefully assembled stock portfolio can provide protection from inflation. But, our economy has demonstrated that economic collapse is possible and a little back up currency is a way to sleep good. I belive that junk US silver coinage is the best form for holding silver for such a calamity. You have to consider its purpose in such an enviornement. Now, there is a lot of debate on golds real value and I
don't think you can invest is silver without considering gold. But, gold (or silver) has never gone to $0. That alone, makes it unique in my opinion. Storage costs are actually zero for most people. If you
wanted to start buying silver today you can simply find a dealer and arrive at a fair price. Don't be suprised to pay a premium over the spot price of silver as per the per coin oz. value etc. Its a supply and demand thing. I have always tried to buy over a longer term to take advantage of any possible dollar cost averaging. At 9/17/09
a silver dime was worth appx. $1.24 silver value. A 50 coin roll would be $62.21 silver value. Again, you will pay a premium above the silver value in todays market. That gives me a notion of the value of paper vs metal in a real time every day market. Now, as far as storage, how hard is it to stash a bunch of rolled coins? If you really run into a storage problem, then you start buying gold coins. You can even bury your gold in your backyard stable for all eternity. You can't bury your silver (the oxidation of silver and it's associated antimicrobial properties is actually one of its souces of value). I will not address the security issues because I believe if you live modestly and keep your mouth shut you will not have any problems.
Now in a meltdown you would need to have self security but that is a different issue. Most people that buy metals for this purpose have already addressed food, water, guns, amo etc. In a sane world this can all be minimal and reasonable. Even in a natural disaster situation all of these thing can work in tandem to protect your self and family. I am from South Florida, so I already have most of these
things year round. And, I like the Idea of having gold and silver to pay for my way off this god foresaken penninsula should the big hurricane ever hit. I know Uncle Sam & co. will not be able to do much for us Floridians. You don't have to be a fringe lunatic too justify a little personal treasure stash. Just know that if things go to for hell for a while, that little silver dime that you paid $1.24 with could easily be worth 10 times that during a crisis. It is also a very discrete way to pay for transactions in a bad situation. Even in its present value think of this. Ten "DIMES" = $10.24. Thats enough to put a gallon or two of gas in the tank and pick up a chicken for dinner. Thats what a dollar of real money is worth. That value has been stripped from our money by the Fed. (Sorry Ben but its the truth.)
The USGS says total world production and demand has been equal thanks to scrap and government sales (production). Total Net Investment for 2006-2008 only totals 141.5 Moz, a third of what is supposedly in ETF hands. If production and demand are equal, where did the other 300 Moz come from?
And to answer the question about silver in private hands, the US Mint has sold 194 Moz of Eagles since 1986 (then you also have maples, philharmoics, etc) Outside of Coins and Medals, the USGS does not have a category for 1000 oz bars, except perhaps "industrial applications".
The same type of "number" questions affect the COMEX where available silver in storage is outnumbered by total positions by a factor of 8 to 1
What a wonderful world it will be once we return to the gold standard. Politicians will be ethical, honest, and forthright. The Lion will lay down with the Lamb, nations will beat their swords into plowshares, the sun will shine, the birds will sing, children will go to church on Sunday morning, and we'll all stand around singing "Kumbaya". :P
On Sep 17 01:47 PM Jeff Nielson wrote:
> Hi Johnny.
>
> My own preference is 1-oz coins rather than bars, for two reasons.
> First, as Teresa points out, there is a strong possibility that we
> could move into the chaos of a post-fiat currency world - with an
> inevitable gap before a new, gold standard restores order to global
> financial markets.
SURE you want to go back to the gold standard? The world has changed since the 1890's. The gold standard is obsolete, outdated, and reflective of a bygone era.
Unfortunately, without reliable numbers on private stockpiles, we can't set aside the possibility that the increase in inventory has all come out of the hands of private investors. The accounting chicanery certainly gives one pause, and is a big reason that my safe is currently stuffed with silver bullion (I can't even fit my guns inside anymore!). Indeed, the ZeroHedge team did a great piece of investigative journalism on this subject where they revealed that a large number of the bullion bars held both in London and in COMEX warehouses are in fact DUPLICATES, with either the same, or substantially similar serial numbers and exactly matching weights (for example S-123456789 rather than 123456789).
The fact that the same banks that operate COMEX hold those short positions is deeply disturbing, and clearly a conflict of interest, even if the fees do cover expenses and net a profit.
Even if all this "conspiracy" talk is BS, silver is still a great investment, with the Chinese market opening up for the first time in decades, and their government actively encouraging the citizenry to buy. That ALONE is reason enough to hold as much gold and silver as you can handle. Include in that a recovering global economy with increasing demand for silver containing electronics, and silver clearly comes out on top. I own a bit of gold, just in case some government were to get smart and start a gold standard again, but I'm mostly in silver and miners.
I think this is a point which needs to be spelled out: for "traders" with a very short-term horizon, SLV is a very liquid means of cashing in on the large inherent volatility in the silver market.
However, for all INVESTORS, the "assets" which supposedly back this ETF are questionable at best. Thus, for anyone planning on HOLDING SLV, you need to be aware of the serious issues which these funds represent as long-term INVESTMENTS.
On Sep 18 01:40 PM saver10633 wrote:
> Great article. I agree that the ETF's do have great risk in the long
> term.
> I do see them as a form of leverage that can be used to speculate
> on price, inventory etc. However, I would not consider them as a
> substitute for a physical holding. Let me say that I am a long time
> gold bug but not as an investor. I believe that long term a carefully
> assembled stock portfolio can provide protection from inflation.
> But, our economy has demonstrated that economic collapse is possible
> and a little back up currency is a way to sleep good. I belive that
> junk US silver coinage is the best form for holding silver for such
> a calamity. You have to consider its purpose in such an enviornement.
> Now, there is a lot of debate on golds real value and I
> don't think you can invest is silver without considering gold. But,
> gold (or silver) has never gone to $0. That alone, makes it unique
> in my opinion. Storage costs are actually zero for most people. If
> you
> wanted to start buying silver today you can simply find a dealer
> and arrive at a fair price. Don't be suprised to pay a premium over
> the spot price of silver as per the per coin oz. value etc. Its a
> supply and demand thing. I have always tried to buy over a longer
> term to take advantage of any possible dollar cost averaging. At
> 9/17/09
> a silver dime was worth appx. $1.24 silver value. A 50 coin roll
> would be $62.21 silver value. Again, you will pay a premium above
> the silver value in todays market. That gives me a notion of the
> value of paper vs metal in a real time every day market. Now, as
> far as storage, how hard is it to stash a bunch of rolled coins?
> If you really run into a storage problem, then you start buying gold
> coins. You can even bury your gold in your backyard stable for all
> eternity. You can't bury your silver (the oxidation of silver and
> it's associated antimicrobial properties is actually one of its souces
> of value). I will not address the security issues because I believe
> if you live modestly and keep your mouth shut you will not have any
> problems.
> Now in a meltdown you would need to have self security but that is
> a different issue. Most people that buy metals for this purpose have
> already addressed food, water, guns, amo etc. In a sane world this
> can all be minimal and reasonable. Even in a natural disaster situation
> all of these thing can work in tandem to protect your self and family.
> I am from South Florida, so I already have most of these
> things year round. And, I like the Idea of having gold and silver
> to pay for my way off this god foresaken penninsula should the big
> hurricane ever hit. I know Uncle Sam & co. will not be able to
> do much for us Floridians. You don't have to be a fringe lunatic
> too justify a little personal treasure stash. Just know that if things
> go to for hell for a while, that little silver dime that you paid
> $1.24 with could easily be worth 10 times that during a crisis.
> It is also a very discrete way to pay for transactions in a bad situation.
> Even in its present value think of this. Ten "DIMES" = $10.24. Thats
> enough to put a gallon or two of gas in the tank and pick up a chicken
> for dinner. Thats what a dollar of real money is worth. That value
> has been stripped from our money by the Fed. (Sorry Ben but its the
> truth.)
I have discussed how to use key fundamental data as the basis for stock selections in the gold/silver and the resource investment areas and a quick look at how to find trends by using technical indicator.
Research is not always easy, for it takes time and effort, but for the serious trader the pendulum system might be the ideal tool to help you for potential success and profit in your trading.
------------------
Money is like muck, not good except it be spread.
www.topinvestingtips.com
When the 'flushing' begins your paper goes along with all else.
DO NOT own paper if your risk tolerance is low. Own and hold the physical metals.
To those with high risk tolerance that hold the paper - good luck!
On Sep 17 08:17 AM john1940 wrote:
> Is gold the same? I've used CEF because I thought they held bullion
> in the same amount as their stock issued. Now I wonder about GLD.
> Have to do more work.
The one ounce silver Maple Leafs and American Eagles are .999 fine. The gold one ounce Maple Leafs are .9999 pure gold, while the gold Eagles are 90% pure. The newer American Buffalo is .999 pure gold.
Typically, you shouldn't pay more than $2 over spot for a silver bullion coin, and $50 over spot for gold Eagle. The gold Buffaloes sell for about 120 over spot right now, being in high demand.
Silver coins typically come in mint tubes of 20 or 25, and people often buy 100 or 500 coins at a time. Gold and even platinum coins come similarly packaged if you can afford a tube at a time.
I also use a couple of local coin dealers for some purchases, especially gold, since I don't have to pay shipping. I get much better prices for silver online, however.
I have a few 1 oz Platinum Eagles as well, although due to collector value they sell for about 200 over spot. Platinum Canadian Maple Leafs sell for about 100 over spot, and now Palladium Maple Leafs are out as well.
On Sep 20 09:20 PM Diogenes of Sinope wrote:
> I use APMEX (American Precious Metals Exchange). There are a number
> of large, online dealers in precious metal coins. I personally like
> Canadian Maple Leafs and American Eagles, given that I live in the
> States.
>
> The one ounce silver Maple Leafs and American Eagles are .999 fine.
> The gold one ounce Maple Leafs are .9999 pure gold, while the gold
> Eagles are 90% pure. The newer American Buffalo is .999 pure gold.
>
>
> Typically, you shouldn't pay more than $2 over spot for a silver
> bullion coin, and $50 over spot for gold Eagle. The gold Buffaloes
> sell for about 120 over spot right now, being in high demand. <br/>
>
> Silver coins typically come in mint tubes of 20 or 25, and people
> often buy 100 or 500 coins at a time. Gold and even platinum coins
> come similarly packaged if you can afford a tube at a time.
>
> I also use a couple of local coin dealers for some purchases, especially
> gold, since I don't have to pay shipping. I get much better prices
> for silver online, however.
>
> I have a few 1 oz Platinum Eagles as well, although due to collector
> value they sell for about 200 over spot. Platinum Canadian Maple
> Leafs sell for about 100 over spot, and now Palladium Maple Leafs
> are out as well.
Its all complicated enough to make holding companies who dig it out of the ground and sell it seem like a simpler investment.
You've missed my point. Lets assume the additional 250moz is real and was bought by bullion banks to back SLV & others. In that case, the bullion banks would incur no delivery charges as the seller delivers metal to London at their cost to be able to sell it on the spot market in London. Secondly, the additional 250moz has no insurance charges - as I said, they only insure the first $1b of holdings, not the entire holdings.
"the ludicrous idea of a BANKER (holding a massive short position) SUBSIDIZING longs by providing free storage/security" & "Will ANYONE suggest that banks will provide a FREE service for precious metals longs - rather than charge someone a fee for storing other valuable assets?"
Jeff, you keep on saying they are doing it for free when SLV charges 0.5%. Some of that 0.5% goes to the custodian, they are being paid. That is not "for free" - I don't understand why you keep on saying they are providing free storage.
The question is whether the 0.5% charge is realistic, profitable assuming the volumes of metal SLV and others hold is physical. As explained in my previous reply it is. Saying this does not mean that they have physical, but nor does it mean they do not.
When you mention the 0.5% fee charged by SLV, my understanding is that this also (supposedly) covers their OWN administrative costs AS WELL AS all the shipping costs, transaction costs, insurance costs, and storage/security costs.
You would be hard-pressed to find any ONE bankster service (in ANY of their business activities) which they are willing to provide for a 0.5% fee. Suggesting that they are willing to REDUCE their fees (to close to ZERO) to SUBSIDIZE the entry of longs into the market is simply nonsense.
On Sep 21 09:57 AM Bron Suchecki wrote:
> "Obviously there MUST be both delivery AND insurance charges for
> AT LEAST 250 million oz's of silver - which could NOT have already
> been in vaults"
>
> You've missed my point. Lets assume the additional 250moz is real
> and was bought by bullion banks to back SLV & others. In that
> case, the bullion banks would incur no delivery charges as the seller
> delivers metal to London at their cost to be able to sell it on the
> spot market in London. Secondly, the additional 250moz has no insurance
> charges - as I said, they only insure the first $1b of holdings,
> not the entire holdings.
>
> "the ludicrous idea of a BANKER (holding a massive short position)
> SUBSIDIZING longs by providing free storage/security" & "Will
> ANYONE suggest that banks will provide a FREE service for precious
> metals longs - rather than charge someone a fee for storing other
> valuable assets?"
>
> Jeff, you keep on saying they are doing it for free when SLV charges
> 0.5%. Some of that 0.5% goes to the custodian, they are being paid.
> That is not "for free" - I don't understand why you keep on saying
> they are providing free storage.
>
> The question is whether the 0.5% charge is realistic, profitable
> assuming the volumes of metal SLV and others hold is physical. As
> explained in my previous reply it is. Saying this does not mean that
> they have physical, but nor does it mean they do not.
Metal is Metal
We had a lot of Paper in Germany 80 years ago!!!
That is all what I can say! Think about it!
regards from Germany, Joe
Almost nothing is ever mentioned about this ... as it can be a deterent to many fishing in the local GLD and SLV fish-ponds.
Isn't that I n t e r e s t i n g !!!
Your Government at Work. Dad
What I pointed out is that it is IRRELEVANT if the bullion-ETF's were audited every day - when the bullion-banks who CLAIM to be the custodians for ALL their bullion have EQUALLY LARGE short positions which are NEVER audited.
As I also pointed out, if the bullion banks had to choose between "covering" their own short positions and honouring their custodial agreements, it is naive to believe they would honour their custodial agreements - given that they KNOW they would face nothing worse than a small fine (as happens EVERY time they engage in bullion-fraud).
On Sep 21 03:36 PM roy piper wrote:
> I just can't get over how many fools keep saying that GLD does not
> allow audits of their gold. The auditor does EXACTLY that twice a
> year and a pdf of their results are available on their website. I
> have no idea how SLV does their thing, but GLD has been at it 5 years
> and unless one wants to claim "conspiracy" without proof, there is
> no evidence that the claims made against it have any validity.
Are there are mixed-commodity ETF's that anyone would like to suggest? I'm curious if an investor would be better hedged if he had a well balanced combination of Gold/Silver/Oil/Copper... Gas
finance.yahoo.com/q/bc...
No it doesn't. There is no difference between purchasing from refineries or on the open market - refineries are all in different countries just like existing stocks. If market makers cannot acquire metal from investors or sellers already holding it in London, they will actually be able to acquire it at a discount to London spot (which is the usual state of the market), the discount equalling the shipment cost into London. Even if they have to pay a premium (or pay shipment costs into London), then they just factor this into their bid and ask prices quoted for SLV. This is why delivery is not a cost that comes out of the 0.5% fee.
"When you mention the 0.5% fee charged by SLV, my understanding is that this also (supposedly) covers their OWN administrative costs AS WELL AS all the shipping costs, transaction costs, insurance costs, and storage/security costs."
The 0.5% does cover their administrative and compliance costs, but as I have discussed above and in my previous replies, any shipping and transaction costs are recovered via market making activities, so these do not come out of the 0.5%. As I have also replied, insurance and storage/security are FIXED costs, not variable, whereas the revenue of 0.5% is variable. This means that once you cover you fixed costs, the 0.5% on any additional metal is pure profit.
"You would be hard-pressed to find any ONE bankster service (in ANY of their business activities) which they are willing to provide for a 0.5% fee. Suggesting that they are willing to REDUCE their fees (to close to ZERO) to SUBSIDIZE the entry of longs into the market is simply nonsense."
0.5% is not "close to zero". On 280moz, 0.5% = $24 million, that is not anywhere near zero. The fact is that in the wholesale market storage is offered for much less than 0.5%. Do you remember David Einhorn's Greenlight Capital exiting his GLD in favor of physical bullion? He did this because it was CHEAPER, in other words he could get storage for less than GLD’s 0.4%. In fact, quoting www.hardassetsinvestor...:
“By contrast, a $400 million player in the bullion market has substantial room to negotiate. You can be sure his [Einhorn] bullion holdings are being custodied for less than 12 basis points.”
If you believe that 0.5% is an unrealistic fee, a subsidised fee and therefore proof that SLV is a scam, then logically you must also believe that Bullion Vault, with a 0.12% storage fee, is also a scam. This puts you in a bit of a spot, because Bullion Vault is one of the most transparent operations in the market, and favoured by many goldbugs and commentators. Your stepping out on a limb here.
On Sep 20 09:20 PM Diogenes of Sinope wrote:
>
> The one ounce silver Maple Leafs and American Eagles are .999 fine.
> The gold one ounce Maple Leafs are .9999 pure gold, while the gold
> Eagles are 90% pure. The newer American Buffalo is .999 pure gold.
>
But keep in mind that all of these coins contain 1 full troy ounce of the pure metal. For example, while the Golden Eagles may be 90% pure, and the Canadian Maples 99.99% pure, the Golden Eagle is a slightly heavier coin overall than the Canadian Maple -- the difference is the non-gold portion of the Golden Eagle (mostly copper). Both coins contain a full troy ounce of pure gold. So don't assume you are getting more gold per coin by buying the Maple.
If we do complete physical inventory counts, it is based upon a limited sample. But, sampling can run into problems because; and this has happened to a bank in KS, simply because the books say they have X amount of inventory does not mean the company has that much inventory and sampling may not catch that error. The story was told in my auditing class in college by one of my professors who audited in the past of a farmer who claimed to have 200 head of cattle. The bank requested an audit of the farmer's cattle so the farmer complied. They stopped at pasture one where the auditor counted 50 cows. Then the farmer got "lost" on the way to pasture two where, guess what, there was another 50 cows. The process repeated itself for two more pastures and the auditor duly reported the cattleman had 200 head of cattle. Trouble was, while the farmer took his time getting from pasture one to pasture two, his ranch hands quickly loaded up the 50 head of cattle and moved them to pasture two. Essentially, the auditor counted the same 50 head of cattle 4 times! Hmmm...could the same happen with SLV? You be the judge.
On Sep 17 01:30 PM Michael Murphy wrote:
> SLV is audited by PricewaterhouseCoopers one of the Big Four accounting
> firms.
>
> "In our opinion, the financial statements listed in the accompanying
> index present fairly, in all material respects, the financial position
> of iShares Silver Trust (the “Trust”) at December 31, 2008 and 2007,
> and the results of its operations and its cash flows for each of
> the periods presented in conformity with accounting principles generally
> accepted in the United States of America. Also in our opinion, the
> Trust maintained, in all material respects, effective internal control
> over financial reporting as of December 31, 2008, based on criteria
> established in Internal Control - Integrated Framework issued by
> the Committee of Sponsoring Organizations of the Treadway Commission
> (seekingalpha.com/symbo...)....
> Our audits of the financial statements included examining, on a test
> basis, <b>evidence supporting the amounts and disclosures in the
> financial statements</b>, assessing the accounting principles used
> and significant estimates made by management, and evaluating the
> overall financial statement presentation. Our audit of internal control
> over financial reporting included obtaining an understanding of internal
> control over financial reporting, <b>assessing the risk that a material
> weakness exists, and testing and evaluating the design and operating
> effectiveness of internal control based on the assessed risk</b>.
> Our audits also included performing such other procedures as we considered
> necessary in the circumstances. We believe that our audits provide
> a reasonable basis for our opinions."
>
> If you don't think they counted the silver, you are wrong.
Over and over you say they 'supposedly' hold massive bullion 'for free'. Get a clue buffoon. They charge (percentage basis) small administrative and management fees.
As to storage, the silver is already in the LBMA type repositories you dim bulb. It doesn't get 'moved' someplace else just because it is added to SLV inventory instead of whatever holder of record relinquishes it at current spot price.
Additionally, learn something about the Ted Butleresque 'fantasy' of deficit silver. He doesn't bother to count the approx 30 to 40% of annual silver supply which comes from reclamation. If you use 200 million ounces in photography for example, and recover 100 million ounces of it, Butler counts that as 200 million ounces GONE.... and then IGNORES the 100 million ounces recovered pretending it does not then become supply!
Similar to your hero Butler's deceptions in saying there is 'less above ground silver than gold'...
Once again that lying bag counts all the gold jewelry, gold artifacts, etc etc in that 'above ground' gold inventory...but IGNORES all the several BILLION Ounces of total above ground silver jewelry, silveware, silver artifacts, etc etc. (not to mention massive unknows such as the CHina silver hoard), when he makes such lying and deceptive statements.
Try and do some research that involves actual numbers from people without an agenda. Rather than being yet ONE MORE bleating sheep following after the totally non credible liar, Ted Butler.
"..The USGS says total world production and demand has been equal thanks to scrap and government sales (production). Total Net Investment for 2006-2008 only totals 141.5 Moz, a third of what is supposedly in ETF hands. If production and demand are equal, where did the other 300 Moz come from?.."
Please look at some stats that are the most complete, well referenced, industry sourced, detailed, and specific...to the extent possible anyway in a global market like silver.
I've looked at the USGS, CPM, Silver Institute, et al but this link below has the best layman's summary of the current market stats...including supply / demand / references....And it shows 100 to 200 million ounces surplus silver annually for years now. (Which has been absorbed by ETF demand....and without the SLV ETF, investment demand, ironically, silver would very likely be much much lower in price)
www.virtualmetals.co.u...
Notice production is broken out into very specific sector and region mine supply, as well as reclamation, recycling, the same.
Using photography for an example once again, you can clearly see that the misleading liars who count the approx 135 million ounces silver used in photography as part of their 'deficit silver' equation, are ignoring the approx 73% reclamation of that same silver (approx 98 million ounces), on the 'supply' side of the equation, when they tell you the Ted Butleresque lie that silver is in industrial 'supply demand deficit', or 'structural deficit.
This is similar to the infantile kind of thinking that wonders why all rivers run to the sea but the sea is 'never filled up'. One must always look at both sides and all known factors to come to any meaningful conclusions about a market as complex and global as silver.
Cherry picking HALF the relevant data on one side of the equation to make a fraudulent point...is...well...po...
may be helpful (I have not verified this but GLD says as much
in its propectus)
Here's a quote from: www.fool.com/news/comm...
"In addition to qualified dividends, some other aspects of the tax law can trap ETF investors. In general, ETF investors must look through to the ETF's assets for guidance on how income and capital gains will be taxed. For instance, the IRS classifies investments in certain commodities, such as gold and silver bullion, as collectibles. This makes them ineligible for the 15% capital gains rate and imposes a higher rate of 28% on any gains. Although shareholders in precious-metal ETFs, such as StreetTracks Gold Shares (NYSE: GLD) and iShares Silver Trust (NYSE: SLV), may buy and sell their shares as they would with any other stock, the ETFs themselves own physical gold and silver. Therefore, when it comes to calculating capital gains, investors have to treat gains as coming from the sale of collectibles and pay the higher rate of tax.":
The strengths in your case are the unbacked short positions and potentially the PWC audit methodology, wise to focus on these.
On Sep 22 09:26 PM Jeff Nielson wrote:
> First of all, I'm not the one who decides WHICH sources of data are
> the most reliable.
>
> The two quasi-official precious metals organizations (the Silver
> Institute and World Gold Council) rely upon the CPM Group and/or
> GFMS.
>
> If you think the Virtual Metals data has more relevance, go argue
> with the World Gold Council and Silver Institute (unless you think
> those two organizations work for ME - lol).
>
> Second, you did not provide ANY reasons why the numbers from these
> BANKERS should be trusted more than the sources of data widely accepted
> by most of the world.
>
> You did a lot of mouthing-off for someone who was able to prove NOTHING.
>
Jeff, have you READ the SLV prospectus??? You state that the SLV trustees have "transaction costs" and that they must be trading constantly to cover retail purchases of SLV. But the trustees do no such thing. That service is provided by independent registered broker/dealers who are authorized by SLV to deliver physical silver to the custodians. Then SLV issues shares to the broker/dealers in amount equal to the physical silver delivered. The broker/dealers are the ones who create and redeem 50,000 share baskets. They are the market makers, not the trustees.
On Sep 17 11:05 AM Jeff Nielson wrote:
> Hi Bron. Just look at all that is SUPPOSEDLY covered by this 1/2%
> fee:
>
> 1) Transaction costs. Purchases must be made CONSTANTLY, all day
> long - in order to buy the actual silver for unit-holders at the
> same price they bought their units at. Given the huge volatility
> with silver, it's not even feasible to restrict buying to once a
> day - since silver has had MANY daily moves of 5% or more.
>
> 2) Insurance/delivery costs
>
> 3) Storage/security costs. Obviously BILLIONS of dollars of silver
> require significant security to guard such a hoard. The U.S. government
> has an entire military battalion guarding Fort Knox - so no one can
> find out how much gold is NOT there.
>
> If you think these costs are minimal, then answer this question:
> why do the small number of companies who hold their own bullion need
> to charge MANY times that premium for their own security/storage
> costs?
You have replied to someone else's comment which appear after mine, but ignored mine. Does this mean you conceed on the issue of the reasonableness of the storage fee?