9921 - In theory you are correct. However if the regulatory body, the Comex in this case, is in cahoots with the players - then how do you audit them. Remember a future contract is just that - you don't have to deliver until the date promised in the contract. So you don't have to have the bullion until say March 1st -at that point in time if their is no bullion available then you settle with the buyer (you, me, a commercial bank, etc.) in $'s or SLV or GLD shares. The Comex never said it would settle in bullion - so how do you audit them. If you or I refuse to accept $'s they will probably add a % to make it more palatable - however if we and enough buyers insist on bullion then we can force the Comex into default. Unless the bullion banks are reined in that will likely happen at some point in time.

As to auditing the SLV and GLD ETF's - supposedly they are audited and bar numbers are inventoried. A number of conspiracy theorists disagree and say they don't hold much of what they are purported to hold as the bullion banks had to take the bars to cover their shorts. The same conspiracy theorists claim that the US Gov't doesn't have a lot of their gold reserve left as it has been swapped to hold down the price of gold over many years. The US refuses to have its holdings audited and only values their reserve at something like $42/ounce or 4% of its current value. So maybe if Ron Paul ever gets his 'audit the fed' bill through we may find that 96% of the reserve has disapeared.

I don't know what to believe. I hope the SLV and GLD ETF's are legitimate. However given the Fed and the US government are using the bullion banks to drive down the price of gold and silver to support the US dollar - how would you ever prosecute anyone who is doing God's work(sorry thats Goldman Sachs) and working in the national interest. The public doesn't care if a few precious metal investors get stiffed.