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Sprott Physical Silver Trust ET (PSLV) Message Board

  • petechamps21 petechamps21 Feb 2, 2012 9:01 PM Flag

    Ted Butler Says SLV is short 26 million ounces

    "In Ted Butlers comments to clients (a paid subscription) Ed Steer was kind enough to steal a few paragraphs. Butler has pounded the table that the SLV has been short over 26 million oz (shares) now for over a year and thus the purchaser does not have backing of metal on those shares purchased. This is, of course, criminal in nature and the SEC does nothing about it."

    Silverbars is contradicted!

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    • And I suppose you consider the 1,173,151 shares of short interest in PSLV as silver missing from Mr Sprott's vault as well? You are not using logic. When someone sells their shares, the shares and the corresponding silver that backs those shares transfers to the new owner. It doesn't matter if you lend your shares first before they are sold, as they are being still been sold and transferred. The people lending these shares do so voluntarily. That's part of the agreement they make with their broker in order to allow them to gamble in the leveraged paper market. All outstanding shares of SLV are backed by physical silver. That's how they are created and that is what they are eventually redeemed for. These existing shares are voluntarily relinquished by current share holders, lent to a 2nd party and then sold to a 3rd party. Only that one lot of shares exists in this transaction and they are now owned by this 3rd party. You don't seem to be able to understand that the first two parties in this example now have a paper-only contract between themselves. SLV has nothing to do with this transaction as neither of these two parties either owns or has any interest in any actual ETF shares. All that SLV is concerned about is the lot of valid, lawful shares which are now owned by the 3rd party. There are no unbacked counterfeit shares and there is no silver missing from the vault. What people call the "missing silver" is what the first party USED TO own.

      As I mentioned before, if you are looking for missing silver then try the $349 million dollars worth that Sprott just purchased. He issued the shares, but for the time being the vault only holds a paper IOU. I have absolutely no doubt that the silver will arrive, but many out there have a great disdain for holding anything that represents a paper promise for future delivery of silver.

      What Mr Butler wants to see is for the government to step in and establish a mandate that says that shareholders no longer have the right to lend their shares. He assumes that these investors will still purchase and hold SLV shares in a cash account, therefore increasing the number of outstanding shares and silver in the vault. In my opinion, lending your shares is stupid, but in a free country you can't legislate people's actions to protect them from their own stupidly, but you CAN try and educate them.

      • 3 Replies to silverbars
      • First, as per the NASDAQ web site, on 2/7/2012 there is NO short interest in PSLV (http://www.nasdaq.com/symbol/pslv/short-interest)

        There are two issues regarding shorting PSLV vs. SLV. The first is that there IS no PSLV shorts. The second is that SLV is creating shares out of thin air (I know you disagree, silverbars, but you don't get 26mm shares short for over a year without having shares shorted into existence), while PSLV can only create additional shares via a secondary offering. The former happens clandestinely, the latter as a matter of public record.

        Additionally, as you yourself have stated, a shorted SLV share is "borrowed" from the owner (who may himself have bought it from a short seller), lent to a seller, who then sells it to a 3rd party. The first party believes he owns the shares he purchased because there is no notification requirement, the third party believes he owns the shares he purchased because his broker provided a trade verification, however only one of those buyers is covered with silver. The only parties that are held harmless upon default are the short-seller and the broker. We would be correct in calling this a shell-game.

        Regarding the PSLV shorts, the same circumstance would exist if there were any shorts. It just happens to be less egregious because Eric and Co. cannot simply create shares from thin air like SLV does (I know the prospectus says that's not how it is supposed to work but most silver analysts believe it to be true, including James Turk, Ted Butler, and Andrew Maguire, the JP Morgan whistleblower). Only the shareholders themselves can create a short position and this limits the damage that can be done.

        There are five issues with both SLV and GLD that give me pause (and these can be verified in the prospectus and in the FAQ from the SLV or GLD web site:

        1. The silver in SLV is NEVER required to be audited. They provide an unaudited bar list.

        2. There are ZERO prohibitions against encumbering said gold/silver in the trust (i.e. leasing it out to short-sellers). The majority of storage is in London which has very liberal hypothecation rules (even worse than the US).

        3. The fund custodian is allowed to use “subcustodians” to store the precious metal, who have no obligation to give proof that they hold such metal. Depending upon the jurisdiction hypothecation come in to play with subcustodians.

        4. The fund custodians (JP Morgan) are the subject of numerous lawsuits alleging naked shorting of silver, which appear highly likely of being successful given the evidence submitted by whistleblower Andrew McGuire and official comments from CFTC Commissioner Bart Chilton.

        5. Unless you are a member of the LBMA (there are five members to my knowledge) you cannot take delivery of your silver.


        Conversely, PSLV:

        1. ...stores ALLOCATED and AUDITED metal in secure vaults (in this case within the Royal Canadian Mint). The RCM is a Canadian Crown company which acts as an agent of the Canadian Government (putting them on the hook for mishandling of the silver)

        2. ...stores PM in a jurisdiction that DOES NOT ALLOW hypothecation (silver cannot be leased out from under the share owners)

        3. ...provides silver which is DELIVERABLE UPON DEMAND under certain predetermined conditions.

        4. ...is a closed end fund; which means that shares cannot be created upon a whim or upon concluding a deposit which may or may not actually involve the deposit of any physical metal.


        For those that want to take a chance that their silver has been hypothecated or double-allocated, or who simply want to participate in a PAPER MARKET rather than a PHYSICAL MARKET, by all means purchase SLV.

        For those who want real silver backing their shares, and for which they can take physical delivery, in a jurisdiction that DOES NOT ALLOW hypothecation, then consider PSLV.

        I've made my choice; I'll live with the consequences.

      • Plus I think the fact that pslv silver is held in Canada and that Canada does not allow re-hypothecation, there is no duplication of silver. The slv holds the silver in Britain which allows re-hypothecation. Hence, 1 slv share can be shorted to infinity and beyond! If the bottom falls out of SLV there would not be enough silver to cover all the shorts. Holders of the shares would be left with paper. This can not occur in the pslv. That is the whole point of owning pslv over the slv. The slv is just a way for JP Morgan to use paper silver to manipulate the price of the physical.

        IF silver bars does not know this he is either a fool or a shill for JPM.

      • Silverbars thinks he knows more about silver than Ted Butler. No Bozo, PSLV is a closed end mutual fund. No silver is added on a daily basis. Shorting PSLV is not in lieu of buying ounces, as it is in SLV. Give it up, clown.

 
PSLV
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