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Sprott Physical Silver Trust ET Message Board

  • silverbars silverbars Jan 26, 2012 1:19 PM Flag

    Paper PSLV?

    Well we now have confirmation from Mr Sprott himself in this KWN interview that PSLV is holding $349 million in paper silver.

    "We have committed to purchase it, I can't give you details as to when we'll receive it because we haven't got it yet"

    So, he has "committed" to purchase the silver. At least when SLV adds silver they update their bar list the same day showing the exact bars that have been allocated to the trust. SLV doesn't issue new shares until they have the actual allocated silver. PSLV holders have to hope that the counter parties to the PSLV deal can come up with the metal and deliver it within, what, 3 months like the original purchase? What if silver takes off to the moon in the next month, the counter party does an MF Global, and the paper promise turns out to be hollow? One hears all this talk about how shareholders are willing to pay a hefty premium because "PSLV holds real silver". Huh?

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    • your story does not make sense,
      what are you saying they will not be able to delever the silver he ordered ?
      if that happens then the current price would go where ?
      are you saying there is a shortage ?

    • OK, you are still confused on how SLV works. SLV is just a trust that holds silver. It only issues and redeems shares in exchange for allocated physical silver bars that is holds in it's vaults. It does not sell silver (except once a month to pay for it's administrative fee). It does not buy silver. It doesn't short silver. It does not sell shares and it doesn't buy shares. It doesn't trade anything in the market. Any buying or selling of silver is done by the authorized participants who are entities allowed to create new and redeem existing shares. Buying and selling of shares is done by the public (you, me) or any institution that trades on the NYSE. You keep saying how SLV is doing this and SLV is doing that which makes no sense at all. You are also confused on the term hypothecation which refers to posting of collateral for a loan. SLV does not loan anything. The silver is allocated and titled to the trust. It is not encumbered in any way, so hypothecation does not even enter the picture. Again, as I've mentioned before, when it comes to SLV it's the shareholders (not the SLV trust) who have signed a hypothecation agreement with their broker who are subject to the horrors associated with this phenomena.

      The article you reference makes a good point - that the market makers are given a 3-day window to clear their trades. The FTD time frame mentioned in the article and shown in the chart was when SLV experienced extremely high volume (up to 295 million shares traded on May 5th). Obviously there was unprecedented high frequency trading occurring and at the time and one might suspect a bit of a log jam in the clearing process. Having a one or two day period of FTD's wouldn't seem out of the ordinary to some, although today's computers should be able to handle all of this in stride. Some people might get the impression that something a little more nefarious or crooked was going on which sure can't be totally ruled out by me. None the less, SLV never appeared on the Reg SHO Threshold List indicating that there was never any 5 day period of FTD's. All trades were cleared in what the NYSE considers a timely fashion.

      I'm not posting to bash PSLV. I was just trying to point out a few flaws/misconceptions. I'm also not trying to push SLV, but again am trying to clarify some misconceptions that many have. None of the metal ETF's are perfect and they are all subject to the proper functioning of the stock market in the case of a economic crash. Invest with your head and never put all of your eggs in one basket. Some investments might look to be 100% rock solid.... until the government unexpectedly changes the rules.

    • Silverbars,

      you are doing some real charity work here in this thread by attempting to inform those who have been brainwashed by inaccurate information they read online. Kudos.

      It won't matter matter - the Silverbugs prove time and again to be "un-educatable" - and it's laughable that there are people reading and commenting on this thread who think that you are the one with inaccurate information. The power and reach of silver misinformation is vast - like the Dark Side of The Force.

      well done - or good effort, at least. nothing but facts and reality.

    • Naked shorting SLV occurs when it's shorted, versus buying the silver on the open market, 26 million ounces, which is unavailable.

    • Naked short selling occurs when an entity sells shares that do not exist. Since these counterfeit shares only exist as digits in a computer, they will fail to deliver (FTD) into the account of party who purchased them. The NYSE reports all FTD's that persist for a period of 5 days or longer here:
      If you check back through the archives you will find that SLV has never appeared on that list. In other words all shares of SLV that are being sold on the market are official fully backed shares as issued by the SLV trust. Valid shares have been delivered to all who have purchased them.

      Now on the other hand, if you look at the linked site above and go to the records starting on 1/11/12, you will see that some criminal element must have gotten inside word that PSLV was going to announce that they were going to do a secondary offering, as on that date PSLV first appears on the Reg SHO Threshold List as a stock that is being sold naked short. Someone counterfeited a pile of PSLV shares and sold them at the sky high premium. After the announcement was made and the premium crashed, the criminal element apparently covered the naked short position and on 1/19/12 PSLV fell off the list. Of course the SEC will do nothing to go after the criminals in this case and you will never see anything in the mainstream media about this theft.

      The current SLV short position is from SLV holders who purposefully/voluntarily dispose of their shares by lending them into the market for resale. Its almost like you're saying that if I sell my SLV shares, then SLV is "missing silver" that I once owned. When you lend out your shares you are making a PAPER deal with the borrower. You have then become an unsecured creditor of the party who borrowed your shares. This transaction is solely between you and the borrower. The shares that have been transferred (lent) have been sold to a third party. That third party is the new owner of those shares and the shares in question are still fully backed by the physical silver in the vault which they represent. The SLV trust owes nothing to the first two parties in this transaction. No silver is "missing" or "borrowed" from the trust. No counterfeit shares have been created. The party who lent the shares no longer has SLV shares in his/her account - the shares are gone! They have been transferred to the new owner. In it's place is a paper IOU with the party who borrowed the shares. The SLV trust could care less what kind of side bets people place on the movements of the SLV share price or in other words betting on the price movements of silver. For some strange ill conceived reason the conspiracy folks seem to think that any bet placed on the SLV share price means that SLV is missing silver.

    • Good interview

    • You are surely not trying to make the case that SLV maintains 100% silver backing for their shares. In the new COMEX accounting rules, a paper representation of silver is as good as the silver, itself. Ergo, Since according to the rules, paper = physical, SLV can make the claim that their shares are 100% backed by silver.

      Once Sprott receives the silver, supposedly in March sometime, the share price will shoot back up to par + premium. Based on his past actions and comments, it's a fair bet that he will not be paper settling with the COMEX. In fact, I would be surprised if he acquired his shares from the COMEX in any case; I think he went directly to the mines/fabricators.

    • well, how can you purchase silver, if you don't have the capital? PSLV needs to do the offering, get the money. then, they go out and buy. So, it makes perfect sense to me, that they can't get silver all at once. And they shouldn't, since others will just front run his trade and drive up the price.

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