More and more evidence that the metal ETF's may be the worst form of paper a gold or silver bug can ever hold.

SLV ETF Adds Massive 523 Tonnes Of Silver In Current Week
Submitted by Tyler Durden on 11/12/2010 17:06 -0500

Commodity Futures Trading CommissionExchange Traded Fund

There were some very odd occurrences in the world's largest silver ETF, the iShares SLV. After the exponential increase of the price of silver in the spot market, almost hitting $30/share on November 9, the SLV ETF, which like GLD purports to holding the underlying precious metal, saw a massive basket creation demand, amounting to a whopping 523 tonnes of actual silver added to the fund's holdings (equivalent to 16.8 million ounces, at a cost of about $456 million) for the week ending November 12, currently at a record 10,718 tonnes. While we don't purport to knowing how much free silver is available in the open market, the possibility that any one entity could have managed to purchase such a massive amount of actual silver, of which 352 tonnes was supposedly acquired on November 10, without completely destabilizing the actual supply and demand mechanics, and creating a vicious loop where basket creation leads to a further surge in prices, is just slightly mind boggling. As we have speculated earlier, we expect comparable activity in the GLD ETF to follow suit. Additionally, we will shortly look at this week's CFTC COT data to determine just how massively JPM's silver short has impacted the firm's P&L.

P.S. for those who may be wondering, the custodian, i.e., entity in charge of vaulting the "silver", is good ole RICO-lawsuit embroiled HSBC. (full SLV prospectus link)

-END-

…Bill,
Yes I saw this. If there were any doubts that this fund holds 100% unencumbered silver bullion then this banishes them for good. There is no way that anyone could buy 11.25 Mozs of silver on a single day. That is 6 days of all global mine output. James Turk has just noted that the silver market is the tightest he has ever seen it. On November 10 silver closed DOWN $2.04 on the floor session…how can 11.25 mozs have been bought and the price go down??? When Sprott or CEF buy silver or gold it takes weeks if not months to get delivery.
Cheers
Adrian