Sunday, May 1, 2011

Ted Butler letter, SLV short shares require physical backing...

April 28, 2011

Mr. Laurence D. Fink
Chairman and CEO
55 East 52nd Street
New York, NY 10055

Dear Mr. Fink,

I am writing to alert you to a possible circumstance of fraud and manipulation in your popular ETF, SLV, due to the excessive short-selling of its shares. Current reports indicate the most recent level of total short sales now exceed 36 million shares. This is an increase of more than 14 million shares from the previous reported amount.

Each share of SLV requires that one ounce of silver be held at the Trust's custodian (minus accumulated ed management fees), according to the prospectus. Since short sellers of SLV shares do not deposit metal with the Trust's custodian, this means that the buyers of the more than 36 million shorted shares of SLV do not have metal backing, as required by the prospectus. It is my belief that many of the shares shorted have been shorted precisely because no physical silver was available to deposit. If I am correct, this may constitute fraud and manipulation, possibly on the part of Authorized Participants (APAs) who make deposits and redemptions of metal in the Trust.

I am a silver analyst and a fan of SLV. I had raised this issue with the previous owner and sponsor of the trust, Barclays Global Investors (BGI). I never did receive a satisfactory answer from BGI about the shorted shares issue, although they did agree to list and publish the bar serial number and weights held in the Trust after I publicly urged them to do so. I am hopeful that BlackRock might be more responsive to this issue.

Publicly-traded ETFs that have specific metal backing are highly unique securities. Perhaps a small short position may be overlooked on a temporary basis until the metal is deposited in the Trust due to logistical considerations. But a short position that represents more than 10% of the outstanding shares issued means that many buyers of the shares have no metal backing. This is clearly not in keeping with the spirit of the prospectus that each share issued be backed by one ounce of silver on deposit with the custodian.

I trust you will look into and rectify this circumstance.


Ted Butler

Butler Research, LLC


  1. Don't hold your breath Ted....even if Fink is an honest guy, the dishonest are going to prevail here for the short term.

    All the manipulation of fraud in Silver is going to end, very suddenly, and w/o much warning. Could be tomorrow or 6 months from now. But we aren't far away.

  2. Gotta give it to Ted, he's like a Shepard on a meat bone with all of this manipulation. I say: GO TED!!

  3. I emailed this letter to O'Reilly Factor asking for him to look into this. If everyone who reads this sends the same request, maybe he will expose this fraud.

  4. I was driving by my local Scotiabank the other day and I saw one of those advertisements they put in their windows that I feel entirely encapsulates the fiscal mentality of North America. It read, "Borrow to get ahead". LOL is that not one of the biggest oxyMORONS you have ever read? Who the hell is in charge of their marketing? I can just picture some douche financial advisor recommending this and the sheep accepting it as a genius idea. Here is a picture of it:

  5. If this keeps up, APMEX will be out of business by morning.

    Damn "they" are desperate.


  6. This is great to watch. Im hoping it goes to 42 so I can load up the boat

  7. BTFD!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  8. 10% drop! Time to back up da truck, its a big sale

  9. Just dropped $5.69; desperate attempts to keep it in check.

  10. Fukin Hulk Hogan SLAM! Damn! Come on $39!

  11. Got my order in! 100 oz on the way!!!! Yippeee!!!!!

  12. silver plunging....down to 42.

  13. Down a cool 20% in 3 seconds. WTF happened? Oh, that can't possibly be manipulation. If the fucker drops to 3 dollars I'll buy 50 monster boxes!

  14. lol, score, I had a stink bid in for 100 if the price dropped to 43, it did for a few secs, my order placed and now moving up again. Yeeeee Hawwwwwwww

    That stink bid on:

    is pretty cool.

  15. lol, look at the chart on top right of page,looks like someone pissing off a cliff.


  17. visionvictory called this volatility in his most recent posting...

  18. *anybody* please humor me a moment. I'm really trying to learn this stuff. WTF just happened and why? Thanks in advance.

  19. agThug it is silver; this is what it does! BTFD!!!


    Silver: Much Higher Margins Ahead for CME?

    In what could be a precursor to much higher margins at the Chicago Mercantile Exchange, MF Global on Friday raised its margins on one contract of silver from $14,513 to $25,397, an increase of 75 percent.

    "I would anticipate that the CME will be raising margins again due to the volatility of the daily trading range as well as to reflect the contract's intrinsic value," he said. McGillivray suggested markets could see some selling in silver when Comex electronic trade starts Sunday night at 6pm ET.

    Well, we got that in SPADES right now.

  21. its because the dollar is making a dead cat bounce

  22. They're tryin to get everybody to dump their shares/physical for US Dollars most likely.

  23. Dear Sir SGS

    Thank you for the videos and the blog (as well as your posts at Turds and ZH).

    Times like this it is good to remember the message from the bear videos and keep the faith.

    Ignore the trolls, they are about to show up in spades.


  24. Gold and Silver DOWN!...Yawn, yawn and once more - yawn...

  25. How can the chart go straight down on a Sunday afternoon? Ever wonder why?

    Death Race

  26. who the fuck is betting on the dollar? WTF!!

  27. this thing will be over like a summer storm....

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  30. This stuff always happens outside of normal trading times. Isn't that convenient? All you can do here is buy physical. But I'm not buying between 40 and 50 until we see what's going on here.
    I'll buy above 50 but not here. Obviously I'll buy below 40 too.

    This is going to get volatile. I had mentioned that we can expect large intraday swinging around. The only caveat is what they are pulling with the US DOLLAR. This could get really stupid and probably will.

  31. c'mom silvergoldsilver,we need some insite!

  32. I'm on a separate platform here and I shouldn't even post this here the way you mock me. It might be my last post on your site but here is the information you don't have:

    A "S.A." trading company sold a huge
    number of naked silver shorts all at once. Did it on Sunday so the USA
    couldn't react. I'm guessing it will recover about 50%. The JPM's who are getting killed by silver won't go down without a fight. They have drawn a
    line in the sand at $50. It may take a while to break it. When it does it
    means they have shot all their bullets and silver will then find it's true
    price. Very high. They are fighting a long term losing battle. Gold
    barely dipped meaning the MM action was in silver. No news to make it
    happen. Just a big trader took a huge gamble selling naked options. If they
    buy they back quickly they'll recoup some losses they've incurred. If they
    think they can keep driving silver down I think they will encounter
    resistance and lose money instead.....more if you want to "REMEMBER HOW YOU CAN THANK ME"....developing...

    The News UNIT Blogspot: You know where it is by now.

  33. @NU Well finally we get a decent post with some actual insight. Maybe that's the key.