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<p>[QUOTE=&quot;desertgem, post: 1512764, member: 15199&quot;]I was not defending nor damning SLV and its role in Silver or the same for GLD and its roll in gold. They are what they are, and if you are looking for a play in silver and will accept paper settlement (USD$), it can let one do this quickly, readily, and in various forms ( shares, options). It is regulated, but trusts are regulated differently than ETFs and commodity pools to my understanding. The SEC does require the regulatory filings. SEC also regulates the trust, but I do not know the section that applies. </p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p>One needs to look at the structure of SLV trust. This is from <a href="http://www.google.com/finance?cid=709305" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.google.com/finance?cid=709305" rel="nofollow">http://www.google.com/finance?cid=709305</a></p><p><br /></p><p><br /></p><p><br /></p><p>From this we see that in forming the trust, the trust issued shares to the original principles of the trust for corresponding amounts of silver deposited to the custodian of the trust ( JPMorgan Chase, London branch). {they hold the bullion silver}. They are also a member of the trust. So if JPM Chase contributes 100,000 oz of silver to the trust, the trust gives them 100,000 shares which JPM can sell or use as basis of options ( shorts if they wish). The silver doesn&#039;t move anywhere. If JPMorgan sells 100,000 shares of SLV, they release the claim on the silver they originally gave to the trust in exchange for them, they have the cash from selling the shares. The silver still stays in their custody even though they can&#039;t claim it, it belongs to the trust. Now JPM can buy more shares, even for cash on the open market, but it is probably easier to transfer the custody of their own personal silver to the SLV trust for the shares. Silver still doesn&#039;t move <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" /> , but new silver has to be deposited to the trust for each new share the trust releases to the depositor. Trust silver can be sold to pay for certain fees to cover operation expenses the principles didn&#039;t assume.</p><p><br /></p><p>If the worse case scenario, if a panic and people sells every share of SLV they own, as long as the big banks that are aligned in the trust can pay out cash per share, either (1) the silver is&nbsp; transferred from SLV account to the individual banks account for each or (2)&nbsp; the bank can just hold the SLV share and the silver stays with the trust.&nbsp; If the banks ( principles) could not come up with the cash, then the trust would have to sell on the open market. This doesn&#039;t have to be done in minutes, the regulatory limits on completing buys and sell are still based on old non-electronic transfers.</p><p><br /></p><p>If the price of silver was crashing so badly, that everyone was selling, the bank might well look at it as a long/short term investment and be getting silver at a very large discount. Why sell it on the declining open market? Hang on and sell it later or sell options or contracts on it. I did not go into fees, etc as they are a small portion of the total. The principles have made great profits since the start of the trust. They created it for their own advantage and as major player in the silver market. </p><p>i have probably done a messy job of trying to explain without&nbsp; just repeating the prospectus. The trust&#039;s asset is the silver it has in exchange for shares issued originally to the principles, who then traded them based on the underlying value of the trust&#039;s assets ( silver bullion).&nbsp; IMO.</p><p><br /></p><p>Jim[/QUOTE]</p><p><br /></p>

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