Spreads widening on the buy & sell prices
Cuprinkor
Posts: 329 ✭✭✭
I live in the Pacific NW and have been following the websites of a couple local bullion shops. With the increasing spot prices of gold & silver their buy/sell margins have noticeably increased. 90% silver bag spreads are nearly 20% ($6000 margin). I have to wonder if any of the public is buying at these levels.
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Recent public interest is in SLV and futures, not physical. But the backing of new SLV basket shares requires physical delivery to be placed with the Trust's custodian, unless the brokers are shorting SLV to new purchases. But they are probably buying futures and doing some arbitrage to offset the risk and eek out a small profit.
Which shops have websites you can check out locally? I'm curious
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
The many silver ETFs (except Sprott) are likely all leasing the same ounces of silver. Probably have to draw cards to see who gets it. The fact that JPM is responsible for holding SLV's physical silver should tell you all you need to know. We all know more futures contacts (paper) are sold than there is physical metal to back them. Do you really believe EFTS (paper) are any different.
And your savings account dollars are backed by the FDIC. . . until enough banks fail.
Eventually silver will reach a high enough price to pull back the "custodian" curtains. Then the price will really take off. Paper is a short term game due to the "who actually has it?" risk. This risk does not exist if you actually have the silver in your hand. Anyone who believes the two type of ownership are the same knows nothing of risk.
Does being a fiancial whiz with dollars make one an expert with gold?
Bochiman:
The sites are www.ajpm.com &
www.centerstreetgoldsilver.com
Curious then why you are trading your physical for paper....so you heirs dont have to deal with physical? But you say it's only a "short-term game". I hope you are not in the bottom of the 9th inning.
Knowledge is the enemy of fear
Yes, the ETF's are different then futures in that the Trust must hold physical silver. Now the big boy B/D's are scrambling to lease the dwindling London supply to fund the ETF's since its mandatory. But futures until expiration require only a small cash margin deposit. They are creating the short squeeze. Read the below this morning:
Another important factor to consider in the current physical silver shortage is the extreme imbalance between "paper" silver and actual physical supply. At present, there are an estimated 360 ounces of paper silver, including ETFs, futures, and other derivatives, for every single ounce of physical silver. This massive disparity significantly increases the risk of a sharp short squeeze, which I believe is going to eventually occur during the course of this powerful silver bull market
Requirement to "hold" an ETF's silver is vague. IShares manages the SLV ETF. However JP Morgan is tasked with holding the silver itself. JPM "holds" silver for a lot of entities and it is widely believed that more than one of JPM's clients has claim to a single lot of silver. Given JPM shenanigans in the silver market (oftened settled with the Deparment of Justice with no criminal charges) I am inclined to believe there is many more claims than there is silver with it comes to someone else being responsible for "holding" an ETF's metal.
Does being a fiancial whiz with dollars make one an expert with gold?
Apparently, London is now being drained of 1.000 oz. bars because of lack a of trust and multiple claims on the same silver, (see derryb's comment above). The refineries cannot keep up with this drain on the system, and shipments from Comex in New York have turned out to be significantly lower than the amount needed to fulfill delivery demands in London because the owners of the bars in New York aren't interested in selling. They see what's happening.
Backwardation has been re-established tonight, as the cash price is $51.60 vs. the futures price of $51.19. Lease rates topped out at 200%, and have backed off a bit, but are still elevated. This situation won't be resolved any time soon because of the refinery backlog and withdrawals from LBMA.
What this means for any silver whether it be 90%, 40%, 80%, 92.5% or .999 - is that the price will continue higher, probably lots higher until the market can finally equilibrate - which is not happening. LBMA is in the process of crashing, and the implications for debt of all types is not favorable. Should you sell any silver now? I wouldn't, and I backed off that notion a few weeks ago. I'm glad that I changed my mind. Hang tight and don't sell unless it's for a very good reason. And keep a cash cushion in order to avoid any rash decisions.
I knew it would happen.
Apparently, the refiners have all the gutter metal they can handle. It's coming out of the woodwork so to speak. Millions and millions of ounces that nobody even wants to buy. No shortage of the gutter out there that's for sure. Meanwhile my paper brothers and sisters continue to push the price higher. Certainly, fun while it lasts but make sure you have a solid exit plan. You don't want to be like Jim left holding the bag when all the dust settles. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
Explains why silver prices are at all time high. LOL
As far as paper buyers setting the price of real silver, per the custodian IShare's Fact Sheet: SLV "seeks to reflect generally the performance of the price of silver." This means the price of silver is not determined by SLV.
Does being a fiancial whiz with dollars make one an expert with gold?
Spreads have widened again overnight. Cash market is at $52.79 vs. $51.40 futures.
For those who can't figure things out, that is called backwardation.
There will be consequences for those who can't figure out what that means.
I knew it would happen.
Agree. Read the whole SLV prospectus and while there is an audit to confirm the new incoming bars match to new baskets shares created, nowhere mentions if JPM can or cannot lend out the bars while they're in the vault. If they're lending to outsiders to cover someone's futures contract delivery and receiving this lease fee for themselves, that should be illegal.
Audit the JPM silver vault.
Read the whole SLV prospectus and while there is an audit to confirm the new incoming bars match to new baskets shares created, nowhere mentions if JPM can or cannot lend out the bars while they're in the vault. If they're lending to outsiders to cover someone's futures contract delivery and receiving this lease fee for themselves, that should be illegal.
This.
Keep peeling back the layers of the onion. People need to know. Even coho will tell you that knowledge is the antidote for fear, but the legacy media won't cover it.
Unfortunately, this type of behavior by SLV won't be illegal until it's too late for 99% of investors and savers. At this juncture, the only real option for most people is to "average into" physical precious metals with a shrinking amount of available funds and to "average out" of stocks & bonds, asap.
I knew it would happen.
When all the leasees of silver held by JPM and others attempt to put their hands on the silver they believe they own, paper silver will vanish and real silver will skyrocket. Keep an eye on the London (LBMA) and COMEX vault hodings as their physical silver deminishes from contract holders taking delivery. As a result of selling more contracts than there is silver to back them the LBMA is already in trouble. This is an early indication of what's to come for the silver ETFs.
Individual investors cannot take physical delivery of silver from the iShares Silver Trust (SLV) ETF. Only large financial institutions, called "Authorized Participants," can exchange a large number of shares (at least 50,000) for physical silver bullion bars. When they start demanding delivery SLV will be in trouble.
Does being a fiancial whiz with dollars make one an expert with gold?
I'm a bit confused on your post. As an ETF, SLV should have actual physical silver, unless its governing documents say otherwise (which would defeat the purpose of an ETF if it just held contracts you could buy directly).
Then you say something about "brokers" shorting SLV to new purchases -- ?????
Then you say someone ("they") are buying futures and doing arbitrage -- ???
Can you provide a bit more detail on what you see with SLV ? Thx.
Who says ? How do you know that things aren't in balance now ? Even if there is some upward pressure, how do you know it isn't resolved by a move to $55 or $65 or even $75 in silver...and then it slowly declines ?
What kind of move in "real silver" are you talking about -- a doubling ? A tripling ?
And if all this doesn't happen for another 2 years....or 5 years....or 10 years....or 20 years....what good is it ??
What's the CATALYST for the series of events you say is going to happen to happen ?
But most futures and options sellers and buyers do NOT take delivery of the underlying stock or index or commodity. They settle the difference in cash. How do you know that won't happen here ?
That's the nature of an Exchange Traded Fund, it has market makers who buy individual underlying holdings and let the fund create and/or destroy individual shares as needed based on AUM (Assets Under Management). The same principle applies (apparently) to SLV and GLD, IAU, etc.
Nothing nefarious there.
The "shenanigans" don't affect the MARKET price of silver. It's all part of price discovery, and just because a couple of rogue traders violate trading protocol, it doesn't mean silver is artificially being kept at 25% of the fair market value.
Why should it be illegal, if it's done for all other asset classes ? Is silver to be treated special -- why ?
If you want to find out about them lending out the metal -- which benefits the same shareholders of the SLV ETF -- contact iShares or JP Morgan. Or better yet, read the annual report.
I read it years ago and I am 99% sure they DID lend out the silver.
What does that accomplish ?
Just saw this, thank you.
Unfortunately, that isn't my part of the PNW
Ours (WA) don't have websites with buy/sell prices (that I have seen). Always want people to fight the traffic and go into the shop. Some few exceptions.
Looking at the ones you list, they have some healthy spreads between buy/sell...
I've been told I tolerate fools poorly...that may explain things if I have a problem with you. Current ebay items - Nothing at the moment
The person who posted it, me.
The higher the price of physical silver the more phyiscal silver the paper holders will likely want to convert their contracts into. LBMA is experiencing this at $50 an ounce. Imagine what $60 an ounce will do to "I want delivery of my contract."
Possibly both
It's happening now.
The same catalyst as has been present since 2008, loss of faith in the dollar both at home and internationally. Price of gold since then confirms this.
Because demand of LBMA's physical is at the point of breaking their vault. The reason for prefering delivery of metal over cash is obvious: the value of metal is increasing while the value of cash is decreasing.
I didn't imply there was. I simply said that if these "market makers" decide they want to take delivery, the ETFs will experience the same thing LBMA, and likely COMEX next, is experiencing: a shortage of physical. The fact that ETFs don't hold their own physical metal (their third party "custodians," such as JP Morgran do), increases the likelyhood of a shortage of physical as these custodians are highly suspect to leasing the sampe ounce of metal to multiple parties in hopes they don't all call for it at once. I suggest you read up on "musical chairs."
Does being a fiancial whiz with dollars make one an expert with gold?
They do affect the demand for physical silver and demand for physical silver affects the price of physical silver.
Because ETFs are falsely leading their customers to believe that the customer's investment in the ETF is backed by physical silver that is in all likelyhood not actually set aside by the third party custodian with the ETF's name on it. Here's how it works: IShares sells the EFT to investors telling them it is backed by physical silver/gold. If IShares claimed it held the actual metal then it's fudiciary responsibility would require them to have to actually have possession of all that metal. By "leasing" the "required" metal through a third party custodian (JP Morgan), IShares cannot be accused of making a false claim. The custodian has no fudiciary responsibility to the investor and is free to say it "has" the metal because it's vault is full of metal. How many other parties have claim to the same metal is the million ounce question. In reality JPM owns all the metal. It simply "leases" it to and "holds" it for other parties.
If an audit properly compares the actual amount of physical in JPM's vault to all the promises for that physical it will tell the investors in SLV and GLD if their investment is in fact backed by physical that has been specifically set aside with the ETF's name on it. Of course, the ETF sponsors (IShares, etc.) do not want their investors to realize the physical has many other party's name on it as well. If these ETFs were exposed as the shell game they likely are then they would have no investors.
Think of the FDIC's promise to guarantee all those bank accounts across the country up to $250K. As of June 30, 2025, the Federal Deposit Insurance Corporation's (FDIC) Deposit Insurance Fund (DIF) had a balance of $145.3 billion. There are trillions of dollars being insured by this fund.
Does being a fiancial whiz with dollars make one an expert with gold?
How do you know that things aren't in balance now ?
Delivery delays, backwardation, spiking lease rates.
I knew it would happen.
JPM or any broker can sell short in their inventory vs a customer buy, that would be a principal trade vs an agency trade. Since the SLV shares are sold in block of 50,000, if you wanted 100 shares, your trade is effected when your bid is matched with a seller. Why can't a broker be on the other side of that trade. They would be JPM or any broker if they sold SLV short to limit upside risk.
Yes done for all asset classes but before anyone's securities (stocks, bonds, ETF's) can be lent, an agreement must be signed between the owner and the custodian and the split of revenue defined. There's a whole regulation on possession & control to prevent brokers/custodians from using someone's fully paid for securities in lending without permission. And even then it must be securities bought on margin, i.e. the customer owes money to the broker. Blackrock and JPM cannot lend my fully paid for SLV without my express written permission and I want a cut of that lease revenue.