"The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy...The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction"
China Buys While Banana Ben Fiddles
Remember, the ONLY way to own gold is to either buy it and hold it yourself, or through an invesment fund that verifies physical custody. GLD, IAU, SLV, SIVR and many others do not provide verified custody - they are potentially fraudulent gold and silver leasing operations. This is not something to take risks with.
Monday, September 7, 2009
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SIVR has twice-yearly audits, one of them unannounced. So why are they "potentially fraudulent"?
ReplyDeleteDennis, did you read the prospectus? The Trustee may visit the premises of the custodian twice per year to examine the Custodian's books and records. The Trustee may NOT visit the premises of any subcustodians. They don't conduct a physical audit of the bullion and SIVR is allowed to use subcustodians just like GLD and SLV. It is set up to be a big leasing operation.
ReplyDeleteThe prospectus says NOTHING about requiring an indpendent audit of the bullion held in custody. This is basically a regurgitation of the GLD prospectus. Here's a link to the S-1 if you don't believe me:
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0000950117%2D08%2D001568%2Etxt&FilePath=%5C2008%5C12%5C19%5C&CoName=ETFS+SILVER+TRUST&FormType=S%2D1&RcvdDate=12%2F19%2F2008&pdf=
As soon as I get motivated, I'm going to hook up that software that lets a blog post PDF files. I did a research report on GLD last Feb. that explicitly goes thru specific sections of the GLD prospectus and shows all the loopholes that allow the Custodian to lease out the bullion. Anyone who bothers to study the S-1's of these trusts is a complete idiot if they understand the language and still buy these ETFs and think they're invested in gold/silver.
ReplyDeleteCEF and GTU are the only two trusts that are legit and allow anyone to go inspect the vaults. And even those two securities are not teh same as truly investing in the actual bullion and maintaining self-custody, or investing in a fund that has verified custody.
Thanks for the reply, I'm just trying to understand this. According to the prospectus, "The Custodian will segregate by identification in its books and records the Trust’s silver in the Trust Allocated Account from any other silver which it owns or holds for others and will require the subcustodians it selects to so segregate the Trust’s silver held by them.... The Trustee may, upon reasonable notice, visit the Custodian’s premises up to twice a year and examine the Trust’s silver held there and the Custodian’s records concerning the Trust Allocated Account and the Trust Unallocated Account. The Trust’s independent auditors may also visit the Custodian’s premises in connection with their audit of the financial statements of the Trust. Visits will not be allowed when no silver of the Trust is held in the Custodian’s vault. "
ReplyDeleteSo, the silver is allocated, and audits are of the bars not just the books. What am I missing? Also, last I checked CEF and GTU were selling at 10% premiums to NAV. And finally, at $16 per oz., $10,000 of silver weighs 39 pounds. If one wants to invest a significant amount of money in silver, how does one keep it in one's own possession?
Show me where it says "bars will be audited."
ReplyDeleteIt says "in connection with their audit of the financial statements." In other words, the auditors only sign off on the records and financial statements.
It says the trustee can "examine" the bars. Show me were it says "take a physical inventory of the bars and matches the serial numbers with the records."
It doesn't say that. And what if a lot of silver is being "held" at subcustodians? The Trustee or the Auditor has no right at all to visit the subs.
You want to place faith in that, that's your business. There has already been analytic work done on SLV's reported bar list that shows many inconsistencies and inaccuracies. See www.zerohedge.com and do a search on SLV to see the work that was done.
I read the work on SLV, but we're talking SIVR here.
ReplyDeleteI take "examine" to mean "look at them in as much detail as you like", which doesn't preclude matching bar numbers to records. But I can see that you're emotionally invested in SIVR not being all that it claims to be, so I won't bother you with any more questions.
One other thing, according to the ETF Securities website, "The bullion will be independently inspected biannually by world renowned bullion assayers Inspectorate International Limited." (My emphasis.)
ReplyDeleteHere's the deal: If you are buying SIVR or SLV or GLD to index the price of gold or silver, that's fine - until enough Authorized Participants all ask for the exchange of their shares for the metal in the trust at once. When that happens, the Trustee has to try and deliver gold/silver that's been leased out and would be unable to replace that metal without substantially driving up the spot prices. Once that happens, good luck if you're holding the shares, because they will collapse, as the leasing gig has been exposed and it's revealed that these ETFs are no less a Ponzi scheme than Enron.
ReplyDeleteHere's a section of a recent report from a subscription newsletter called the Gold and Energy Advisor. The author came to same conclusion as I did, but he sums it up nicely - he is referring to GLD, but it applies to IAU, SLV, SIVR, as the prospectuses are nearly identical:
"I think GLD was set up to do two things:
1. Make gargantuan profits from the gold leasing
trade, and…
2. Make others pay for it.
The gold market has a huge sector that few know about: gold leasing. Gold leasing can be done for a variety of reasons, but here’s a common example. A jewelry manufacturer wants to create and market a new line of jewelry, but doesn’t have the money to do so. Rather than pay high interest rates to a bank, it just leases gold from a large gold holder. The manufacturer uses some of the gold to make its jewelry, and sells the rest to raise money for marketing and other expenses. Once the new jewelry is made and sold, the manufacturer buys gold on the open market to pay back its lease, including some extra metal as interest. Gold leasing is a very lucrative industry. However, it’s very difficult to get started. You need a tremendous amount of money to buy your ‘inventory’. That’s why the industry is dominated by just
a handful of mega-banks like UBS and JP Morgan Chase. But imagine what you could do if you could get the market itself to buy your inventory for you. Imagine how much money you could make if you
noticed the growing popularity of ETFs (exchange traded funds), and set one up to buy gold. If you did
a good job marketing it, you could convince hundreds of thousands of people to buy gold with their
money and allow you to “store” it for them. Now you have a vault brimming with millions
of ounces of gold. And you didn’t pay a dime for any of it. The best part of all is that…None of the suckers— I mean, investors— have the right to ever inspect the vault and make sure all the gold is there, or that any of it even exists."
He wrote his report after seeing Greenlight Capital and several other large hedge funds get rid of their GLD shares and buy physical bullion that they have direct custody of.
Like I said, and I said this in my original research report, if you want to use GLD/SLV et al to index the price of gold/silver for short term trading, that's fine. But if you invest in those trusts thinking they are as good as owning gold and silver, then may god have mercy on your investment account when they get exposed by a large call on their gold/silver by big Authorized Participants who want to take delivery.
Dennis, I'm done trying to turn the light on for you. Tell me how the bullion inspector will have access to any metal being held at the subcustodians? The trust were all set up to use subcustodians to facilitate leasing of the metal. If you can't understand that, or refuse to see that, that's fine. Good luck.
ReplyDeleteOh, one more thing. It makes that claim on the website. Show me where it says that in the SEC S-1 filings. Making a claim on a website and being legally obligated to fulfill that claim because you represented that in a legal filing with SEC are two different matters - entirely.
ReplyDeleteI hope you aren't long the stock when a big fund wants its underlying bullion delivered and SIVR can't deliver it because it's been leased out.
AND, one more thing for the benefit of anyone reading this comment thread, the statement on the website refers to an "inspection" by an assayer. Do you understand what that means? First, an "inspection" is definitively NOT an audit. An assay inspection is when the assayer picks out a few random bars (I didn't say the trust was empty, I am saying it is largely leased out) from the bars that are at the Custodian (note: not the subcustodian because no one is allowed to visit subcustodian premises) and verifies the weight and content of the bars randomly selected. THAT is an "inspection" by an assayer. Don't believe me, call the Trustee yourself and ask them.
ReplyDeleteThat is not anything remotely like an audit in which each bar is counted and the serial numbers verified with the Custodian and Trustee records.
If you're okay with all that, bon appetit. Anyone else reading this, if you want to index silver, buy CEF (50/50 gold/silver) or buy some SLW. Or just buy mint boxes of silver eagles and keep 'em in well-hidden/guarded spot in your home.
If you own SLV, I would strongly recommend that you sell your shares and either buy physical silver coins for your own safekeeping, or invest in an ETF like SIVR, which requires that the trustee provides a physical audit of the custodian's silver holdings twice a year. To continue holding onto your SLV exposes you to the risk of being Madoff'd.
ReplyDeletePosted by Dave in Denver
Yes, I made that comment on July 28th before A friend of mine asked me to look at the SIVR S-1. I had fallen into the same trap as you by taking the propoganda surrounding SIVR at face value, without doing truthseeking research. That was then, this now. I probably should have amended that post, but I forgot about it and there's a lot of stuff write about. I believe I have referred in some recent posts to SIVR as being a leasing fraud.
ReplyDeleteI've just laid out for you, in painstaking detail, why SIVR is just another fraud. And I'm doing it for free. You're welcome.