jason hommel had a lot to say about the silver etf (slv) in his latest essay. he had a lot to say about many other subjects as usual, but here are his reasons for not owning slv. in particular, if any of six entities defaults, your silver investment can blow up.

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The third biggest silver fraud is probably the SLV ishares silver trust. It's like the roach motel, you can check in, but you can't check out. Easy to buy, but impossible to take delivery of the silver. You have to be an LBMA member bank to get delivery. How cozy and convenient.

A lot of us don't trust the SLV ETF. Supposedly, it has 6901 tonnes, or about 221 million oz. of silver, worth about $2.2 billion.

There are at least 6 brokers between you and your money, and they all need to get paid when you buy or sell shares in the SLV.

1. The sponsor, Barclays.
2. The custodian, JP Morgan, who is supposed to hold the silver.
3. The sub custoidans, which can have further
4. More sub custodians
5. The market making brokers who buy and sell the actual metal, futures, and/or shares in lots.
6. Your own brokerage account that holds your SLV shares for you.

SLV is not silver. It is promises and sub-promises of unauditable brokerage houses, and JP Morgan is an LBMA member, and is the bank with the largest portfolio of derivatives in the world, over $80 trillion. How can the SLV pay up to 6 middlemen or more, and give you a good spread? Think.

The entire reason behind owning silver is thwarted with the SLV.

Silver cannot default. SLV can.

You own silver to protect against bank failure and brokerage failure.

SLV cannot protect you in case of brokerage failure or custodian failure or sub custodian failure or Barclays failure, or short selling failure to deliver, or your own brokerage failure. Six brokers means 6 chances of failure.

For the SLV, consider Taxes: Physical silver purchases, for the most part, are non reportable. SLV sales are reportable.

For the SLV, consider Confiscation: If the Government changes a law, to confiscate silver, which silver is more vulnerable? Silver in your safe that that they cannot find and don't know about? Or silver in the SLV, which would have to be turned in or converted to "paper"?

http://silverstockreport.com/2008/fr...