In a follow up to last week's excerpt from out recent Q&A
with Ted Bulter, questions were asked warehouse movement in other commodities
and about the big ETF...
Are you seeing the frantic movement of metal in other
commodities markets?
Do you believe the ETF’s are actually backed by physical metal?
Ted: The movement is not taking place in gold or copper or any other
COMEX, NYMEX commodity. And I'm not aware of this movement taking place in
any other exchange.
The COMEX approved gold warehouse could be an exception. This is a Brink's
gold depository in Hong Kong. But it’s not really part of the COMEX system.
It's a relatively new one and they show a lot of movement but it's not
related to this.
I'm aware of it and I just don't trust too many statistics from China
anyway. When I called the COMEX to inquire about this they were in the dark.
It isn’t really a COMEX warehouse in the sense of silver COMEX
warehouses, or the copper COMEX warehouses, or the gold warehouses, and
platinum, palladium and the NYMEX, etc.
Silver is unique. As far as there may be some connection between some of
this silver either eventually going to or coming from the SLV, you have an
ocean separating, and it’s not the most convenient thing to ship back
and forth.
We have some turnover in the SLV and it is counter intuitive. In other
words, some of the deposits and withdrawals from SLV are taking place for
reasons that you wouldn't normally think of.
It has to do with avoiding SEC shareholding requirements and moving silver
around that might be needed elsewhere. But generally speaking, I don't have
any reason to doubt that the SLV doesn’t have the silver to back the
shares. I know a lot of people doubt it.
I wrote a couple of public articles back in 2006-2007, and I petitioned at
the time the sponsor, the owner of the SLV which is Barclays Global Investors
to provide the bar numbers, the serial numbers and the bar weights and
the hallmarks of the silver that they have on deposit because up until that
time they weren't doing it.
State Street, the sponsor of the GLD was listing the serial numbers of the
four hundred ounce gold bars that were in the GLD but at that time Barclays
wasn't putting the serial numbers and making them public.
To make a long story short, they didn't hesitate to provide details. In
very short order, they agreed to do it. The list all the bars that are held
in the SLV. You can go to their website and get the serial numbers and
the weights and there's such a chain of responsibility in this stuff. Big
names and some of them are J.P. Morgan admittedly but not everything
that they do is crooked and if you want to look at it and say, "Oh, no,
they're just lying about the bar list and they're lying."
BlackRock, the largest money manager in the world with almost four
trillion dollars worth of assets under management, whose reputation would be
shredded overnight if it turned out that the silver wasn't there. I'm
suspicious of a lot of things, maybe more so than most people, but I draw the
line at what's you really got to bend over backwards to assume that the
metal isn't there.
Now, again, it's not a big deal. I'm not trying to convince anybody to buy
the SLV. I own it but don't get a commission on it or anything like that. If
you don't want to buy it, don't buy it, and if you're more comfortable
holding real silver that's fine.
With possession the problem is you get so much silver for the money, that
at some fairly low level of investment dollars you got to have it stored
someplace. You can't handle it yourself. These thousand ounce bars,
that's always the closest to the price, represents the best value, these
things weigh seventy pounds. Fifteen thousand dollars is a lot of money
but seventy pounds is even more in weight and from a practical point of view.
If you were to buy a sizable amount of silver you got to have somebody
store it for you and you want to pick the best storage mechanism
possible.
That's an important thing, you want to be sure that your silver is where
it's claimed to be, it's there and you want to make sure you got ...
You don't get your own serial numbers when you're a shareholder in SLV,
but if you're storing silver say at one of the COMEX warehouses which a lot of
people do, you want to make sure you have the weight of that bar, the
hallmark of that bar, the serial number of that bar. That's the only way to
own it.
There are two different kinds of silver. There's silver that you store
that you got all that information on, serial numbers and weights, et cetera,
and that's the real stuff. Or you get a pool account, an unallocated
account where you don't get the numbers.
I would be very suspicious about any form of silver that I was storing
that didn't have the serial number, that didn't have the provisions that I
could go get that bar, have it delivered to me at my cost.
People lose money. This outfit that just went out of business that's going
to cost people about twenty million dollars wasn't just silver, Bullion
Direct. They were claiming to be storing gold ands silver for people and
it turned out they weren't.
How can the individual protect themselves? You've got to use some common
sense. The first way, if you're going to be investing in thousand ounce bars
because that's the best value, you want to make sure it's either in an
ETF that you trust and is physically backed. Or you want to have your own
storage. But you want to make sure you have all the specific
details.
By the way, that's how the suit against Morgan Stanley several years ago,
ten years ago I guess, I'm getting older, came about.
I had a reader who kept asking me, "Look, I've got silver at Morgan
Stanley, okay, and they won't give me the serial numbers. What should I
do?"
I said, "You don't have silver. If you don't have a serial number,
you don't have silver. They don't have it."
I'm not saying they're not going to be good for the money. They may not go
out of business because of this the five or ten thousand ounces. But at the
same time, they don't have the silver because there's no reason why they
wouldn't give you the serial numbers. He persisted and he got a lawyer and
the lawyer filed a class action lawsuit. He was the lead plaintiff and they
paid. They paid two to four million dollars in fines but it addressed the
same issue. You've got to be sure the stuff is there as is reasonably
possible.
The discussion begins at the 52 minute mark.
http://www.silver-coin-investor.com/
