Mark McHugh

SLV Trading Volume Soars – While Shares (and Silver) Vanish?

In Open Thread on Thursday, May 5, 2011 at 12:16 pm

Nowadays everybody has to learn to do more with less.  For reasons I’m not smart enough to understand, the SLV is becoming a shining example of that old adage.  Since its inception in 2006, the SLV has traded more than 100 million shares exactly 10 times, 9 of which occurred consecutively (April 25, 2011 – May 5, 2011 (today)).  In fact today was all-time, #1 volume day for the SLV (295mm).  So no doubt the SLV is doing more.  What’s utterly amazing is they are doing all this crazy volume 33 million shares less (and ounces of silver) than they had just 7 trading days ago.  So in the last 9 trading days, trading has totaled more than 4 times the number of shares currently in existence.

Now that’s doing more with less! 

SLV shares outstanding chart from Stockrageous.com , they also have historic shares outstanding data available for download.

Even mighty Apple at its mo-mo-mo-iest never came close to this kind of volume relative to shares outstanding.  In October 2008, AAPL traded 160% of its outstanding shares for the entire month.  At the present pace, SLV will trade well over 1000% of its shares outstanding in May.  Un-believable.  Maybe Blackrock’s Kevin Feldman would like to write another letter explaining to all us conspiracy theorists how the world’s larget ETF is 97.5% backed by silver, and how more trading volume = less silver held in trust.  Maybe Kevin would also like to explain exactly when Blackrock decided to deviate from its 2009 SLV prospectus…..

 (Screen capture from 2009 SLV prospectus)

Fun Facts:  Despite having exceeded the 264.5 million ounce limit in 2009, JP Morgan is still the sole custodian of SLV.  As of this writing, JPM still has exactly zero ounces of registered silver in its COMEX vault.

Maybe Kevin would like to retract that statement about “protecting shareholders interests” now, or maybe he would like to publicly thank Jamie Dimon for holding even more silver than the trust intended him to be responsible for. 

Selloff, what selloff?

I think it rains because I left my sun roof open, but I don’t go on national television declaring that to be the case.  Saying that the CMEs recent margin hikes are responsible for the plunge in silver is supported by even less evidence (open interest in the July futures contract has risen by 50% since April 20).  Furthermore, would somebody please explain to CNBC’s Bob Pistrami that there hasn’t been a selloff in the SLV, and even if there had been, it would have zero impact on the price of silver.  Now if Bob wanted to report that 33 million ounces of silver vanished from the trust for no apparent reason, that would be accurate reporting.  If you look at the COMEX report, you’ll see that there’s not much going on there, but once again, JPMs “customer” is  the preeminent seller of silver.  Keep in mind, they were buyers a couple weeks back at higher prices.  Buy high, sell low.  That would be even funnier if I didn’t believe the US taxpayer was subsidizing this trade.

…And the COMEX supply of registered silver remains tighter than ever:

Recap:  More volume = fewer shares; Tighter supply = lower prices.

Kidding aside, the time to capture criminals is when the crime is in progress, and if you’ve ever wondered what “yellow journalism” looks like, turn on CNBC today.

 

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  1. [...] Thanked 480 Times in 397 Posts SLV Trading Volume Soars – While Shares (and Silver) Vanish? Recap: More volume = fewer shares; Tighter supply = lower prices. They will pay, pun [...]

  2. ALL THAT IS HAPPENING FROM THAWING OUT BIN LADEN TO THE STAGED GROUP PHOTO WITH OBAMA AND THE GANG WATCHING THE REAL TIME CAPTURE OF BIN LADEN. THEN YOU HAVE THE MARGIN HIKES TO STRENTHEN THE DOLLAR. AND LAST BUT NOT LEAST THE APPEARANCE AT GROUND ZERO.THIS IS THE ONLY CARE HE HAS IS FOR RE ELECTION AND USES THESE SITUATIONS TO GET RATINGS.BELEIVE ME THE USA. IS THE LAUGHING STOCK OF THE WORLD.

  3. Ya. Heart Attack funny!
    Buzz

  4. Tighter supply = lower prices suggest fraud big time. The government has to be printing money and giving it to JPM. They do not have the silver. All that can result is an armed revolt. Many of the criminals who are involved in this will get a bullet in the head when the dollar goes. They deserve it.

  5. I’m buying gold and silver, bullets, food (three years worth), and plenty o’ ciggy’s.

  6. [...] SLV Trading Volume Soars – While Shares (and Silver) Vanish? [...]

  7. If what you have said is true, it’s just more of the same.I am always encouraged when Bart Chilton says he’s going to get to the bottom of this fiasco.I’ll be expecting that ” check in the mail” too.(sarcasm)
    Fabulous article.Good hunting for the truth.
    To hear everyone else explain the recent massive drop in Silver’s price is just nonsense.I was thinking the same as you.Us twisted minds think alike!

  8. Great post Mark, unfortunately in America, big crime pays handsomely.

  9. Mr. McHugh, I found your blog via Coinflation a few weeks ago, and I like it a lot. If you could take the time to explain a few basic concepts for me, I’d appreciate it. Consider it an interview request. (Please, at the very least, acknowledge this comment so that I don’t feel like Andrew Maguire when he e-mailed the CFTC.)

    1. When JPMorgan decides that they want to take the silver price down, what exactly do they do?

    2. What exactly is a ‘custodian’? Can JPMorgan just take silver out of SLV whenever they need to?

    3. What is JPMorgan’s goal at this point? Do they want to get out of the silver shorting game completely or keep fighting to the end like a modern-day Nick Leeson?

    4. Why did the price of silver rise from US$40 to US$50 so quickly? Was it Asian short covering or did JPMorgan intentionally make the price go ‘parabolic’ in order to make it easier to crash?

    5. Andrew Maguire’s e-mails to the CFTC went public more than a year ago. Why do you think we have yet to see a major silver purchase like India’s 200 ton purchase of gold?

    6. Do you think the CFTC will ever make a serious effort to stop JPMorgan’s silver manipulation?

    7. Do you think that the end of silver manipulation would lead directly to the complete loss of faith in the US dollar?

    8. When you look at the supply and demand of silver from both an industrial and monetary perspective, can you envision a future in which the price of silver is more than the price of gold? Could ‘long silver’ become the all-time greatest speculation in history?

    Thank you.

  10. I read all the comments, X.

    I’ll do my best to answer the questions you asked.
    1. The silver futures market is far more theory than reality, very few contracts end in delivery. By selling contracts (pretending you have more silver than you actually have), you increase the supply (artificially, but that’s details). When the supply of silver goes up, the price drops. Recently we also saw margin hikes on contracts, meaning it cost paper silver speculators more to enter and stay in the game. Large numbers of traders had to close their positions, they couldn’t afford to stay in the game. This amplified the drop in prices.

    2. The custodian is charged with the task of storing the silver held by the trust. JPM would be breaking the law if they just took silver out of the trust. But I would never trust JPM NOT to break the law. I think it’s a real bad idea to allow them to be custodian.

    3. In my opinion JPM goal is to perpetuate its place in the world. If people get the idea that you don’t need Too Big To Fail banks services anymore, you just need silver to preserve your wealth, a whole lot of bankers are gonna lose million a year plus jobs. We don’t need them anymore. In some cases these big banks “sell” silver to their clients, and store it for them. In the case of Morgan Stanley, the didn’t actually have the silver. They just settled in cash…..If you’re selling people stuff you don’t have, you want it to drop in value. I don’t think JPM has a long term plan, they just want to keep the game going, because when it ends, it won’t be good for them.

    4. As far as I can tell, JPM ran out of silver for delivery and no one else was willing to deliver at $40, thus the sharp rise.

    5. I’m not sure. A purchase like that might “validate” silver and skyrocket the price, driving up product prices in the process. It might be viewed as an act of agression too. But sooner or later somebody is gonna try grab it………all of it.

    6. No.

    7. Not necessarily, but the longer it goes on the more likely those two events will be inextricably linked.

    8. I can imagine it, but it isn’t a condition I see lasting long. They say nothing cures high prices like high prices. In other words I think industrial demand would drop and people would sell their fillings. I don’t think of silver in terms of speculation. I think of it as a very useful resource that has been squandered. Surely the transition to an “honest” silver price will bring handsome profits, but still, if I were to bury a time capsule for a hundred years for the benefit of my great great Grandchildren, I’d fill it with as much silver as I could…..

    Well, that was exhausting!

  11. X,

    I wrote the reply before I approved the comment. If it’s out of order, that’s why.

  12. “I have received and reviewed your responses. Thank you so very much for your observations.”

    But seriously, thank you for answering. I look forward to your future posts.

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