Another Warning — This Time on Paper Silver

Over at SeekingAlpha.com, Jeff Nielson is worried about the iShares Silver Trust (SLV: 14.98 +0.23 +1.56%):

As most holders of SLV should know, SLV holds no silver. Instead, it has custodians who (supposedly) hold all this silver on their behalf – again, virtually free of charge. These are the very same bullion banks who have been accused (unofficially) by myself, and most other precious metals commentators of deliberately manipulating and suppressing the price of gold and silver – in order to conceal their reckless mismanagement of the world’s financial system.

These are also the same bullion banks who officially hold the world’s largest “short” positions. In the case of silver, the short positions of these bullion banks now total nearly 500 million ounces (according to the latest tally from Ted Butler) – and in proportionate terms represent the largest concentration of positions in the history of commodity markets (on either the “long” or “short” side). As Mr. Butler has pointed out on numerous occasions, this fact alone is compelling evidence of manipulation.

XX Sean’s note:  Full disclosure here:  My Red-Hot Commodity ETFs subscribers own the SLV, they’ve taken gains on the SLV, and even if they’re stopped out, they’ll probably grab more gains on the SLV.

Meanwhile, the SLV is one of the positions recommended in my “Gold Fever” report earlier this year.   And those positions are doing GREAT.

My point is that while I prefer to hold physical gold and silver, I think there’s nothing wrong with using the SLV (or the GLD or DGP, for that matter) for a trade.  It’s much easier than shlepping down to a precious metals dealer and buying physical gold and silver with the intention of selling it later.

Physical gold and silver you buy and HOLD.  Paper gold is fine for trading.  If you disagree, that’s fine, too.  As a trader and investor, you need to be aware of what’s being said out there.

Related Posts

• Warning on Paper Gold (09/20/09)
• Silver Transcript — Gold and Silver News — More! (12/01/09)
• Wall Street Journal Story on Silver (10/04/09)
• US Mint Suspends Production of Some Gold and Silver Coins (Again)! (10/07/09)
• Silver, Platinum and Gold (01/25/10)