Silver And Physical Inventory (Part 2 – The Big Silver ETF)

November 9, 2015

In a follow up to last week’s excerpt from our recent Q&A with Ted Bulter, questions were asked about 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. Maybe there is this one gold that

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.


Dr. Jeff Lewis is the publisher and editor, of He recently created a forum called the, a community of like-minded individuals active in the silver market. He also runs a private membership program called the Lewis Mariani Silver Letters.

Peru became the world’s largest producer of silver in 2012.