ed steer of casey research comments on the silver and gold etf's:

I'd like to explain what I mean by "alleged" when I refer to the gold holdings of either the GLD or SLV. I know I've explained it before, but an e-mail that I received yesterday via Ted Butler suggests that I should do it again. Yes, I'm confident that there is gold and silver in these ETFs...but not all that they say they have. The individual prospectus on each of these ETFs is so full of holes, you could drive a Mack truck through most of them. There are no public audits, so there is no way of knowing whether all the metal they say they have, is actually there. The custodians for each do not lend confidence either. The two U.S. bullion banks with the biggest derivatives positions in the precious metals market...JPMorgan and HSBC USA...are the custodians of the silver and gold ETFs respectively. Both Ted Butler and I agree that JPMorgan is by far the biggest silver short...if not the only silver short...amongst all the U.S. bullion banks. You'll excuse me [and the rest of the GATA crowd] if we think something stinks here.

This is one of the few areas that Ted and I totally disagree on. Our conversations turn ugly whenever this subject comes up...and he calls me a lot of terrible names at times. He thinks that it would be pure fraud if the ETFs did not have all precious metals they said they did. True...but how is one to find out? And I trust these two bullion banks just about as far as I can throw them. How about you?

The ETFs are fine for speculating on the price...but to say you own gold when you own one of these [or other] ETFs is pure fiction. The ETFs short their own shares whenever they don't have the metal to back up demand. Ted and I agree that JPMorgan will rig a sell-off just so that it can buy back the shares they shorted and not have to physically deliver the metal to the SLV.

If you really want to make sure that whatever investment vehicle you buy in the precious metals arena has the physical to back it up, you have several choices...and here are a few of them...the first of which is Central Fund of Canada, James Turk's GoldMoney, Bullion Management Group, Central Gold Trust...and soon CEF will have their Silver Trust up and running. I'd bet my life savings on the fact that these firms have the metal to back up their funds that they say they do. All you have to do is phone their auditors and ask. And I'm also fortunate enough to know the principals of all these firms...most of them personally.

But before you invest a dime in any of them, just make sure that your own personal stockpile of gold and silver [in your physical possession] is big enough, before you buy any fund...even GLD and SLV if you must. I don't...and won't...own either.

http://www.caseyresearch.com/displayDrp.php?e=true