What will happen if the ETF's have sold more than they hold!
dlimb2
Posts: 3,449
Physical is gonna runnnnn runnnn runnnn! If they have enough to cover, its going down. Is there any records of ETF's buying more to cover their sells?
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The shares number of shares of SLV and GLD are limited to 1/10 (in the case of silver - i.e. 10 ounces of silver = 1 share) and 10 times (in the case of gold - i.e. 1 ounce of gold = 10 shares) the ounces of metal on deposit (respectively).
That is why the stockmarket is in such a mess!
The silver and gold ETFs 100% above board? No way.
roadrunner
<< <i>Impossible.
The shares number of shares of SLV and GLD are limited to 1/10 (in the case of silver - i.e. 10 ounces of silver = 1 share) and 10 times (in the case of gold - i.e. 1 ounce of gold = 10 shares) the ounces of metal on deposit (respectively). >>
Not impossible. It is well known the loopholes in SLV fine print, and lending, leasing, selling short can and does take place. When you read the Prospectus, which is the info that they want you to see, everything looks on the up and up. But when you dig further into other area like the Statement of Additional Information, then you begin to see the AHA.....
SLV is just another mechanism being used by the big boys to aid their manipulations of the market. Why do you think they allowed it to be formed?
Sound familiar, Boys?
Same as the FED o anyother Bank, fractional reserve requirement. Yet movement of these two ETF's affect the physical holders value.
But ONLY if we allow it. Hence, the decoupling of the Paper from the Physical has begun.
When you buy ETF shares in a metal, you are not forcing them to buy metal for you. You are merely buying shares from another seller; the metal is (supposedly) already there.
The whole shorting business of selling shares you do not have goes on. I wonder if I will ever truly understand that. From my standpoint, it sounds like a shenanigan.
Note my lack of trust. I won't buy this paper stuff. Then again, I won't play any margin games either. I've done very well 'the long way' and I sleep better at night, which is one of my tests for investing. I need sleep.
I will buy a relatively small amount of physical metal, about the weight of my cat. That is my goal. One cat-weight of silver. It's a fat cat.
Even if the ETFs screw up in a big way and destroy the confidence of the public...which in turn will cause everyone that holds this paper to sell it...I would imagine that the ETF is then forced to become a buyer of those shares...retire them...and reduce the physical metal holdings. That would be the only way to keep the shares in line with the market they are supposed to reflect. It sounds like a house of cards built on the trust of the untrustworthy. I have a hard time with trust even after I read a prospectus! After all, i'm in it only for the money and I expect nothing more from anyone else in this game. Oof. I'm cynical today.
You should be. We've been sold down the river by the Bankers in 1913.
I never thought ANY Web VIDEO would ever get me to watch the whole thing, let alone 3 hrs until I happened upon this!
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Delivery notices are filed with the SEC. Shareholders KNOW when the deliveries
are due to be taken ,and both they and the regulators monitor the same.
There may be good reasons not to use ETFs. The FALSE notion that "there is
not enough metal to cover the outstanding shares" is not such a reason.
IF anybody has contrary FACTS, simply contact: enforcement@sec.gov.
And, please don't bother responding that "the SEC does nothing." That is UNTRUE.
I have dealt with them on MANY issues, including FTDs, and they DO act when they
have EVIDENCE.
There is nothing wrong with holding physical PMs. I am not interested in storing
and securing THOUSANDS of ounces; with the ETFs, I don't have to.
The "per ounce premiums" add up on physical PMs. Metal prices often have to
go up/down $1.00 or more for me to see a profit. That $1 move goes into MY
pocket with the ETFs.
Too many introductions of people with big sounding credentials, followed by anecdotes with nothing real to back them up.
It is produced for folks that are not particularly educated in my opinion. I was waiting for something I could grab a hold of and use as a springboard for my own research. After 20 minutes, I gave up. What I saw was propaganda.
When reading history, I insist on seeing it from the source. It is harder to do. They are all half-truths. I try to get both halves.
I'm sure these are 'fighting words' for someone passionate about the issue. I'm sorry for that. It's best to vent my feelings than to ball them up; i'm using this forum as therapy.
Tell that to Merrill Lynch customers who found out ML didn't have their bullion. Why would Barclays or JPM be considered any more trustworthy? Heck, the world's central banks won't even give out a straight figure on what "real" gold they own. I predict that before the commodity bulls is washed up, that indeed their will be a major scandal with either the gold or silver ETF's not having all the metal they are supposed to. Human nature meets Wall Street.
When metals go up or down $1, the physical bullion that I own also goes up $1...that's money in my pocket as well.
roadrunner
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It is a "return of capital," if you paid that dollar as a "premium to spot," when
you bought the items. There is no such premium on ETFs.
Round-Trips (buy/sell) can be negotiated to less than $10 inside of an active trading-account.
......
BUT, I would also NOT hold LONG ETF-positions in a longterm CORE account. They are best for
use as a trading vehicle. Cheap and Convenient.
Same thing that happened when the mortgage companies/banks got caught loaning out more than they had - meltdown. Except, the Fed won't be there to bail you out. Be sure you are among the first to sell when the time is right. Currently, the time is NOT right.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Believe me, I am not a conspiracy guy, you know, "the US did NOt take down the twin towers".
I was almost lost in the first 20 minutes, myself. You are not alone.
What hooked me was the history that is detailed. The Crime of 1873 is explained perfectly. How Lincoln funded the War and the way the Bankers fought the GreenBack.
What is laid out is perfectly balanced. It is not protrayed as evil, only how it works. It's a dated Film , almost 10 years old; ( the guy says the deficit is 5 trillion Dollars, its actually just over 10 Trillion, now) however, the history presented is as relevant today as it was 10 years ago. What transpired with the creation of Central Banking as the middile-man between the people and the Government is a Fact and the FED has done everything in its power to foster and continue the illusion that the FED is a Government run bank when it is not iin the slightest.
And of course, they were written exactly to do just that - protect the interests of their clients. That's what attorneys do.
What does that mean to me? Nothing, unless a bunch of short positions can't be unwound because the warehouses can't deliver on a physical delivery contract. Won't that be a hoot!!
I knew it would happen.
Actually, this would have nothing to do with unwinding (i.e. covering) a short position.
I think you're right. Good catch. But I bet you got my drift.
I knew it would happen.
San Diego, CA
<< <i>Doesn't really matter, all trades will settle one way or another in cash anyways. >>
No. If an entity can't settle they'll be liquidated and the silver owner
might not even get his principle back. The ETF's are probably much
safer but in a default it's tough to tell what would happen. The short-
fall might be divided among all the longs or it might apply only to those
with unbacked shares.
Trades settle in cash only so long as silver doesn't explode upward. If
it does then most of the silver in the world is scrap paper.
If you're buying because you know it's grossly undervalued then get
out of paper and into physical. If you're just trying to make money in
an up and down market then paper might be right for you.