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<p>[QUOTE=&quot;desertgem, post: 1316609, member: 15199&quot;]I would like to caution any such article over a month old, as a year is almost a financial eternity when it comes to derivatives. Secondly, this article gives more details on ETFs if one is interested.</p><p><a href="http://en.wikipedia.org/wiki/Exchange-traded_fund" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Exchange-traded_fund" rel="nofollow">http://en.wikipedia.org/wiki/Exchange-traded_fund</a></p><p><br /></p><p>One thing that I find is never mentioned is that such articles look at the shares of GLD or SLV being outstanding and then add the call options , but ignore the number of short options. In actuality, the number of call options and the number of put ( short) options such as on SLV ( so called paper silver) offset each other on expiration with payouts going in cash ( NOT physical silver). Those who hold the SLV stock in less than a basket ( 50,000 shares) can only exchange it for cash, not physical. Those over 50,000 shares must be a partner in the trust or work through a partner&nbsp; (such as JPM) to convert to physical with conversion charges. </p><p><br /></p><p>What this means is that only the partners could cause a run on the trust for physical. The rest would have to settle with cash. There has not been any evidence that in the US , any member has illegally shorted &quot;naked&quot;. Some foreign branches associated could have, as in some world exchanges, naked shorting is not monitored. But remember that the SEC gives rather long settlement and reporting dates for &quot;naked shorting&quot; in the US, sometimes 30 days or longer. Thus a US concern or investor ( if you are rich enough or a politician ) could legally &quot;naked&quot; short and cover after 29 days. </p><p><br /></p><p>If you want physical, buy retail or buy physical futures ( also at full price), but don&#039;t buy shares of ETFs if you think it gives you rights of taking it in physical ~ it doesn&#039;t, and wasn&#039;t intended to do so from the beginning.&nbsp; Shorting is as necessary as going long. There must be a balance ( which is offset by cash). In real life, imbalances do occur on a daily basis, and then the marketmakers have to buy/sell their own stash to even it up.[/QUOTE]</p><p><br /></p>

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