Reddit Didn’t Conquer Silver, But It Did Spook An ETF
Reddit's excitable gamblers and other retail investors suffering from delusions of grandeur (and I'm uniquely qualified to diagnose that, by the way), didn't succeed in cornering the silver market, but they did manage to force a prospectus tweak in the iShares Silver Trust.
Whether this is "news" or not is largely in the eye of the beholder, but it's unequivocally funny.
This was documented by Katherine Greifeld on Tuesday. When I saw it, I scribbled a note to myself to mention it. If nothing
Maybe if the firms who conduct financial engineering on such a grand scale, and build paper houses, had been more mindful of their actions the last couple of decades, people wouldn’t be so cynical and jaded. They helped ensure the capture of our political system. Why would the public be sympathetic to any actions the trust custodian takes to prevent a rip in the edifice. Oh, that’s right, they custodian firm was acting in the interest of our pensions and and 401(k) savings. I forgot.
There are paper houses out there. The iShares Silver Trust does seem to have been revealed as one of them. For those following this one for the last 15 years, there has been pretty much, ongoing conjecture by many who are on the outside but knowledgable.
On this particular trust, if it’s so dangerous, they know, and they, in coordination with regulators, should take actions to mitigate the risks, including shutting it down. Adding a few paragraphs to the prospectus doesn’t really remove the danger of a rip in the fabric, does it.
It doesn’t matter for this trust, though, right, because they list the numbers of their physical bars on a website. So, really no problem after all. They have the silver. I just checked. The bar list is a 10,067 page PDF. Solid. So, nothing really to see here and we should all just move along.
I’m not into the conspiracy theories. That’s not the point. The point is that all of this is just financialization on top of financialization on top of financialization. Every layer that we add makes it more abstract. Abstractions of abstractions of abstractions, all built originally on myths — stories we’ve told ourselves.
And as my daughter repeatedly points out to me, we all have our own private versions of those stories. Perhaps that is why this century has gotten increasingly out of hand and society more fragmented.
Interesting.
Now, do stock brokers hold all of your shares? Or do they lend some of them out to short sellers and arbitragers to earn some extra fees.
Speaking from first hand experience, bullion dealers also lend out gold especially, to earn a bit of return. That includes central banks, by the way.
When it comes to coins and smaller bars, our bank also lent out customers holding from the vault. Now & then we’d have to really scramble to find some pieces when I client asked to take physical delivery of the pieces.
I cannot recall if we every lent our silver bars or bags of coins.
So the only way to make certain that you actually own metal is to buy physical pieces. Some funds promise to not lend your holdings and say they will be sitting on a shelf with your name on it. Most do not make that promise.
BTW- the large contract-size silver bars are not shiny things. They are a dirty gray in color, sitting stacked up on palettes if our vault was any indication.