this is an excerpt for March 7th Coin Week Article. I was wondering what kind of trouble this might make A tip from one of my most reliable sources says that there are Far East buyers who are so frustrated at the difficulty in locating physical silver to purchase that they are purchasing large quantities of shares of the SLV silver exchange traded fund. Their plan is to redeem the shares for the underlying physical silver. http://www.coinweek.com/bullion-report/gold-and-silver-set-record-highs-with-more-room-to-run/
That rumor was widely distributed, mainly to Dealers in PM websites. If you read the SPDR GLD Trust and basically same for SLV https://www.spdrs.com/library-content/public/SPDR%20Gold%20Trust%20Prospectus%2003.31.2010.pdf You can see that GLD and SLV can give physical delivery IF: you deal in baskets ( 100,000 ) shares, and are one of their "Authorized participants" ( banks like JP Morgan , Goldman Sach. Swiss Suisse, Meryl Lynch, Morgan Stanley, UBS, etc.). These banks originated the shares that SLV and GLD holders can buy,sell, trade, option, etc. But only the original Authorized participants can cash them in ( 100,000 shares lots ) for physical delivery, and only if the trust allows. They could instead just buy future contracts themselves for delivery, but they would have to put up the full amount rather than just the margin 10-20% needed if settling in cash. In either case, I think the chance of retail buyers/sellers causing a squeeze is nil. Trade SLV and GLD for cash and use it to buy physical yourself if one wishes. The "Asian buyers" mentioned could set up their own trust if they wished, but then they would have to use full cash value. All in my opinion. Jim
