In recent years I have carefully examined the Gold Exchange Traded Fund (NYSE ticker symbol: GLD) are analyzed and written extensively about it. My main conclusion is that GLD is no viable alternative to owning physical gold. Http: / / www.financialsense.com/editorials/turk/2007/0305.html: My article explains, this conclusion can be read at the following link
1)"... there may be situations, in particular where the trust is unexpected cash. For example, one can claim against a third party that will arise paid in cash."Why should there be any cash settlements? To be SLV physical silver and only transactions in real silver, not derivative contracts. Cash settlement implies that SLV in derivatives, cash settle in the future (ie not a spot market transaction) if needed SLV counterparty not physical silver to meet its obligations to deliver silver when the counterparty's obligations become due is involved.
2) "The iShares are a simple and inexpensive means to be an investment similar to an investment in silver."Clearly, while SLV can be "similar to an investment in silver," it is important to consider each of the shareholders' perspective, it is not an investment in physical silver.
5) "withdrawals may only be suspended (i) during any period in the regular trading suspended on the AMEX or restricted or the exchange is closed (other than scheduled holiday or weekend closings), or (ii) in an emergency result of the supply, sale or evaluation of silver can be applied is not useful. "
This clause is a big red flag. If there is an emergency, the authorized participant to create and redeem the iShares baskets in exchange for the provision of silver in the vault not in the hands of all silver, assuming of course get that silver has again delivered actually preserved in the vault . This provision makes it very convenient for the custodian bank to avoid late deliveries, probably because the custodian can declare a state of emergency if they do not deliver on the physical silver.
7) Neither the sponsor nor the trustee has experience with a trust the only assets of which expected to be silver. "
Why say "expected to be silver"? Why it does not say that SLV "are silver 'assets?The seven points ahead, and many more quotes that I placed in my notes but excluded for brevity and I wondered whether SLV really holds physical silver.
The numerous ambiguities that I discovered created in the 10-K to induce enough uncertainty about SLV Silver me to dig deeper, so I next went to the prospectus, which can be downloaded at the following link: http://www.secinfo . com / $ / SEC / Filing.asp? D = 14D5a.v68N5
The prospectus has not helped clarify matters. In fact, it had to be uncertainty about the integrity of the silver. What's more, it made me really think about whether parts of it were intentionally written to confuse potential investors. For example, in the glossary "Unallocated" custodial control of silver is defined, but allocated storage is not. Allocated is only within the definition of "Unallocated" mentioned, but allocated memory does not define itself as a term that included very odd for a fund that is to own physical silver. Does this mean that the custodian is not "assigned" to a given definition of restricted, so that the term can mean whatever will mean the custodian of it?
Here is a curious fact from the prospectus: In its description of how the London Bullion Market, the term is assigned and defined as follows: to "After the LBMA, these accounts open when a customer is to be separated from metal and A detailed list of weights and tests. "Note that it says" the LBMA ", and not to the glossary, which is defined as I mentioned earlier allocated storage. So a casual reader is led to believe that the silver in SLV meets the common understanding of the allocated memory (ie, as the LBMA defines this term), but there is no basis for this view, because it is not assigned to a defined term in the prospectus.This remarkable treatment of "allocated" is deliberately misleading, and raised further my curiosity, particularly because the prospectus states that can "The custodian bank and its subsidiaries and affiliates of time to buy time or sell iShares for their own account, as Central to their customers and for accounts over which they exercise investment discretion. "Obviously, the trust and the custodian bank is not a neutral trustee. If they buy and sell SLV, these mean probably that they sell SLV short.
It was clear to me at this stage that I needed to focus the Custodian Agreement, and it is this agreement that the big surprise instead. This agreement is between the Bank of New York, the trustee and JP Morgan Chase, the custodian bank. It describes Morgan Chase's responsibility, which interestingly is not for storing SLV silver. Rather, it is "to open and maintain for you [ie, SLV's trustee] the account ... and other services to you in connection with the account."
This statement of responsibility is important. I had the opportunity to Morgan Chase agreement for allocated bullion accounts, which are their responsibility states are as follows:. "JPMorgan Chase Bank has agreed bullion to keep for the trustee and provide other services in connection with Bullion" So clearly, the Custodian Agreement is fundamentally different from an allocated bullion storage agreement.But just as important as this distinction of the different responsibilities Morgan Chase is, it is not the real shocker. It is the following provision of the Custodian Agreement:
"'Bullion' means any of our Silver or a sub-custodian in the account associated with from time to time instead. "It does not define "other Bullion", but the process of substituting silver is recognized in Section 2.5 (a) which states: "For every Business Day not later than 09.00 clock, New York time on the following business day, will We will send you information that the movement of silver in and out of the account, taking every single transaction made and every substitution of silver under clause 2.7. "
What should one make of this "substitution of Silver" by the custodian? One possible interpretation is that only silver stored within Morgan Chase Vault is assigned, and "other Bullion" Silver is not stored with the assigned sub-custodians. This interpretation is supported by the following statement in 2.8:
"Here in case of at least ten days before, during our regular opening times of banks, such officers or duly appointed representatives entitled ... to our area of Silver by us in our rooms instead of being under this Agreement and our records examined by the silver held a Sub-Custodian ... Unless we at least ten days before and had reasonable assurances (in our sole discretion) that all costs and expenses incurred in connection therewith will be indemnified us, we are not obliged to move to our premises a silver at a Sub-Custodian for purposes of this available for inspection as provided herein take place. "
In other words, Morgan Chase to prove not act as custodian, that the silver in sub-custodians really exists. This arrangement is alarming, especially with regard to the following definition:
"'Sub-Custodian" is a sub-custodian, agent or depository (including an entity within our corporate group) appointed by us to perform all our obligations under this Agreement including the custody and safekeeping of Bullion. "
Take these various points from the Custodian Agreement, it seems entirely possible that Morgan Chase London has the credit SLV silver to another entity within the Morgan Chase corporate group. Do you remember the name Mahonia from a few years ago? It was one of the special purpose entities (SPE) used by Enron to disguise its fraudulent accounting, and Mahonia was directly involved with Morgan Chase. An article from TheLawyer.com 5th July 2004 states:
Claimed "said WestLB that Mahonia, a special purpose vehicle ... was simply a" creature "of JPMorgan Chase rather than an independent trading company body. WestLB that JPMorgan Chase Mahonia be used to create a fictional impression that the transactions were commodity trading there.
So the obvious question now is whether SLV disclosure documents were made slyly to casual readers not with precious metal vaulting and storing arrangements that SLV physical features silver experienced "a fictional impression present" while in reality it with "other Bullion been replaced "by Morgan Chase? Even for those knowledgeable about precious metal storage and vaulting, as many existing or potential shareholders SLV go to download and read the Custody Agreement?
An article in CFO Magazine on 25 July 2002, entitled: "Enron's SPEs: Can Banks have it both ways, it continues:" According to court records, was JP Morgan Chase sent appear in their cake and eat it too - that is, special purpose entities to keep regardless, but exercise control ".
Morgan Chase is again trying to have it "both ways" with real silver SLV? Is the so-called "other Bullion" in reality an unallocated account of an unnamed sub-custodian somewhere within the Morgan Chase "corporate group" buried? More to the point, there are false or devious accounting of physical silver, SLV supposedly holds? It is unlikely that the following clause of the Custodian Agreement, your confidence in the integrity of the memory process, increase by Morgan Chase for SLV silver used.
2.6 Reversal of entries: "We [ie, Morgan Chase] at any time without prior notice, provisional or erroneous entries in the reverse effect with reserve account value back to the date on which the last or the correct entry (or no entry) should been made. "
In my nearly four decades long career I have never experience a clause like this, either in or out of a legally binding contract. Reversing incorrect bookings made in error by mistake is one thing that do not need no specific clause in a legally binding agreement to allow these setbacks. But vice versa, "provisional" entries and explained them at all times to a "right" seems to me an open invitation to back-date its financial records, whenever it may suit or perhaps even more threatening to hide.
For example, what is the custodian of a provisional entry showing that SLV has been silver physical and loaned is no longer in the vault, and then reversing that entry if the auditors were investigating the custodian of the books to prevent?
I could go on, but I think two points are clear. First and most importantly, SLV not an alternative to ownership of physical silver. Just like GLD, it is seen to be a trading vehicle. Use SLV for speculation, as you would use silver future contracts to speculate on the price of silver. Second, there are many unanswered questions, the alarming of which is why the apparent deception and trickery instead of straightforward language in the SLV disclosure documents? Is it because of the concentrated short position in silver, which Ted Butler has written so clearly? His work can be read here: http://news.silverseek.com/TedButler/Let us imagine the following scenario. The concentrated shorts in silver have a problem. They are naked short, with commitments, deliver far more silver than they own. But they realize that if they go into the market, the physical silver they need to buy their supply commitments to honor, the price of silver will soar, available given the limited stocks of silver, so that the naked shorts to a huge loss. Have also reported large naked short positions - - have risen as the prices we have recently seen a day of reckoning in nickel and other base metals.
So, to postpone their own day of reckoning, in my imaginary scenario from the fact that the silver shorts came with a schema. It requires the authorized subscriber of the SLV to physical silver to the custodian bank to deliver. Once the physical silver is in his control, the custodian bank is replaced with "other Bullion" (ie, silver IOUs in the unallocated account of a company within the custodian bank group) so that SLV used real silver to help, the shorts of the administration their predominantly large short position, while at the same time investors in SLV mistakenly believe that this ETF backed by physical silver.
What is more, the custodian bank and back-date hide their storage record to reverse the true status of SLV silver. This imaginary scenario is speculation at this point, but I'm at a loss to explain otherwise, what does my analysis of SLV revelation revealed documentation.
None of the above should surprise readers familiar with the work of the Gold Anti-Trust Action Committee, which is freely available Filed under: www.gata.org. Though GATA has focused mainly on the manipulation of the price of gold concentrates, but also stands to reason that silver - gold's cousin - also through the same clique which has capped the gold price is manipulated. After all, if you even the metals, precious and looks like it is only gold and silver which are still far from a record high.
Lastly, SLV shareholders believe that the SEC with respect to their interests. After all, not the normal regulatory protection of investors by the SEC for SLV? This question is easily answered. It is in the prospectus. The Trust is not registered as an investment company for purposes of U.S. federal securities laws and is not subject to regulation by the SEC as an investment company. Consequently, the owners of iShares are not the regulatory protection of investors in investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain circumstances) shall not apply to SLV.
If you own SLV or are planning to buy it, is the guiding principle of caveat emptor.
By James Turk
"2.7 Substitution of Silver: With your prior approval (in consultation with the sponsor), we [ie, Morgan Chase] may substitute other Bullion for Bullion in the assigned account instead, provided that there is no change in the total number of troy ounces of silver in assigned to the account on hold. "What is "other Bullion"? This agreement defines bullion as follows:6) "If the process of creation and redemption of Baskets of iShares encounters unexpected difficulties or is materially restricted due to illiquidity in the market for physical silver ..."What is the definition of "unforeseen difficulties" is? Means "insolvency" means that it is not enough silver to satisfy the custodian of the ETF held its redemptions? I think so, because this clause goes on to say: "If this is the case, the liquidity of the iShares may decline and the price of the iShares may fluctuate regardless of the price of silver, falling ...", ie a discount below the silver price because The owners of the shares is fundamentally different from physical possession of silver.Consider? This is a very low standard to meet. Why not say, "require"? Is it because there are more than 1100 ounces of silver assigned? This conclusion is supported by the next sentence. It should be ignored to read the word "accordingly" because this word makes it seem that the contents of the second sentence logically follows the first, if not in deed. He says that the Custodian holds physical silver for SLV in both "allocated and unallocated accounts", which is of course a contradiction in itself. Unallocated accounts are only silver IOUs and not real silver. What is more, say why is it that the "bulk" of silver "is represented by physical silver"? In fact, it should say all the silver except 1100 ounces. By saying, "bulk" instead of "all but 1100 ounces" one can only assume that the choice of "bulk" was deliberate, close to me that a large part of the non-held silver in physical form. Was there malicious intent behind this choice of words - in fact, behind the two cited above, the two sets - to keep the casual readers astray?To consider 4) "The trustee arrangements with the custodian bank, which may in the end of each working day to make it into the escrow account no more than 1100 ounces of silver in an unallocated. Accordingly, the majority of the trust's silver holdings of physical silver, on the custodian's books in allocated and unallocated accounts represent identified. "These two comments are contradictory. Title / bullets often have no legal bearing within an agreement, the first comment is irrelevant, and seems like a marked ball intentionally mislead the reader an understanding. Only the second movement - the "silver" is not listed - is relevant. Sun SLV shares are covered by real silver? Or in other words, what is really the composition of the assets of the trust?3) The following is a highlighted bullet: "with silver by the Custodian on behalf of the trust backed." The next sentence reads: ". IShares by the trust assets shall be secured"The following quotes in italics are taken from SLV 10-K, but first, a piece of advice. When reading these quotes, please read what they actually say, not what you think, say or say they should. Because we are preconditioned to think that SLV backed by silver, we can read more in these quotes, as they assert, or even worse, make conjectures about the fact that not in fact supported. Bill Clinton provided the world a great service by awakening it to the dark art of legal double-talk, when, in his rationalization of the grand jury that he lied about Monica Lewinsky is not noticed because his statement "depends on what the meaning of the word 'is'. "Thus through the list carefully and attentively, to see what the disclosure documents are really telling us about SLVTo share with you some of my thoughts, I select below several key sentences from various SLV disclosure documents, provide my comments to this information and a list of some of the many questions that arise. For now the questions remain open, but when taken together, they create them enough uncertainty about the integrity of SLV that its shareholders should rethink their reasons for buying.However, my preconceived view of SLV began to change with the first page of its 10-K. Now, after many hours of reading and studying all the SLV disclosure documents, it is clear to me that SLV is no alternative to owning physical metal. There is too much uncertainty over the allocated (physical silver) and unallocated (silver IOUs) accounts. But I've also reached a disturbing conclusion. I came across a shocker, which I discuss below. I discovered deep in the documents that SLV-managers have buried filed with the SEC. After reflecting on everything I've read, it seems to me that not only is SLV not an alternative to ownership of physical silver, but because of the gun and what I will for many tricks in its disclosure documents, it appears that parts of the SLV's disclosure documents were thinking specifically to mislead investors that SLV was backed by silver, when in reality it is not manual labor. This conclusion may seem extreme, but I believe it to be reasonable on the basis of publicly available information that I have read I encourage all to read all of SLV documents filed with the SEC to see whether you agree with me. ? Http: / / www.secinfo.com/ $ / SEC / D = Filings.asp 14D5a.v2nFc: They are listed under the following linkI'm not on the Silver Exchange Traded Fund (ETF) (Amex ticker symbol: SLV) was - until now. I approached this task with an open mind. I did not expect any important or interesting revelations to come from reading SLV 10-K because I do not expect SLV to have the same loose custodial sentence controls that plague GLD. These make GLD unsuitable for anything other than trading partners, such as a futures contract is a commercial vehicle and not an alternative to owning physical metal.
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