![]() In turn, those repurchases may dramatically increase the price of the Shares until additional Shares are issued through the creation process. To the extent that the aggregate short exposure exceeds the number of Shares available for purchase, investors with short exposure may have to pay a premium to repurchase Shares for delivery to Share lenders. Speculation on the price of silver may involve long and short exposures. Investors may purchase Shares to speculate on the price of silver or to hedge existing silver exposure. Here is part of the prospectus amendment that Manly did not quote in his article (emphasis mine this time):Ī significant change in the sentiment of investors towards silver may occur. If SLV runs out of physical silver to add to the trust, SLV shares are going to rocket higher. Some silver bugs seem to believe that if SLV runs out of silver to source, the shares will fall, but I believe this is wrong. But I’m on the fringes of the fringe, and so I’m here to respectfully clear up what I believe to be a major error some in the silver bug community are making regarding SLV, particularly as it relates to these changes in its prospectus. The question is, what happens to SLV if it runs out of silver to add to the fund?Īs a silver bug myself, I count myself a proud member of the army that wants to see a silver squeeze. If SLV Runs Out of Silver, The ETF Skyrockets Turns out by the SLV prospectus amendment, he was right. He pointed out just days before he covered the prospectus amendment that 85% of the silver in London was already owned by ETFs, the implication being there wasn’t much left to add. Manly already had done some meticulous work documenting that there already was a physical silver crunch going in London. Such occurrence may lead to further volatility in Share price and deviations, which may be significant, in the market price of the Shares relative to the NAV.” In such circumstances, the Trust may suspend or restrict the issuance of Baskets. It is possible that Authorized Participants may be unable to acquire sufficient silver that is acceptable for delivery to the Trust for the issuance of new Baskets due to a limited then-available supply coupled with a surge in demand for the Shares. Market speculation in silver could result in increased requests for the issuance of Baskets. To the extent that demand for silver exceeds the available supply at that time, Authorized Participants may not be able to readily acquire sufficient amounts of silver necessary for the creation of a Basket.īaskets may be created only by Authorized Participants, and are only issued in exchange for an amount of silver determined by the Trustee that meets the specifications described below under “Description of the Shares and the Trust Agreement- Deposit of Silver Issuance of Baskets” on each day that NYSE Arca is open for regular trading. “ The demand for silver may temporarily exceed available supply that is acceptable for delivery to the Trust, which may adversely affect an investment in the Shares. …Wednesday 3 February, right after claiming to add 3416 tonnes of silver to SLV by frantically tapping the LBMA vaults in London, the iShares Silver Trust prospectus was changed, and the following wording added: Ronan Manly of Bullionstar pointed this out on Feb. The risk? That the fund may run out of available silver to source, and be forced to restrict the issuance of new baskets. 3, SLV amended its prospectus and added a new risk factor on page 7. 3, just two days after silver popped briefly above $30 an ounce, premiums skyrocketed and physical markets were cleared out of monetary supplies across the world. Like a game of silver Whack-a-Mole, the venerable army of silver bugs is armed and ready with their silver mallets, raining down fury on the iShares Silver ETF ( NYSEARCA: SLV) as soon as it pops up and does something weird.
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