A Closer Look At Gold And Silver ETF’s (GLD, SLV)

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July 16, 2009 1:15am ETF BASIC NEWS NYSE:GLD

gold-and-silverThe logistics of Gold (GLD) and Silver (SLV) ETF’s has always been debated. We found an interesting piece that is worth a look.  “Ever since the launch of the US gold ETF, GLD, in November, 2004 and the launch of the US silver ETF, SLV


, April 2006, a debate has raged in analyst circles regarding the legitimacy of these two investment vehicles as a proxy for physical gold and physical silver. Though all evidence against investing in these two trusts has been entirely circumstantial, plenty of red flags exist in both the GLD and SLV prospectuses that should steer any logical, rational human being that wishes to own gold and silver away from these two investment vehicles,” Reports J.S. Kim from IB Times.

Conflicts of Interest

“Let’s begin with the obvious. Is it not a huge conflict of interest that JP Morgan, a bank that perpetually ranks among the largest short positions against silver on the COMEX, is the custodian for the iShares Silver Trust (SLV)? According to silver analyst Ted Butler, JP Morgan is consistently among the one or two U.S. banks that hold more than 80% to 90% of the entire commercial net short position in COMEX silver futures. If you have positioned yourself to make huge profits from drops in the price of silver, is it reasonable for you to simultaneously desire investors to buy more physical silver (if indeed the SLV holds the amount of physical silver it claims)?” Kim Reports.

“Is it also not a conflict of interest that HSBC bank, a bank that allegedly holds some of the largest short positions against gold on the COMEX, is the custodian for the SPDR Gold Trust (GLD)? If these banks profit when gold and silver drop, and they manage the largest ETFs in the US regarding these respective metals, is it unreasonable to state that these two banks should be barred from acting as custodians of the GLD and SLV? In fact how is this situation any different than Goldman Sachs’s actions in the past when they originated CDOs and then made a fortune by shorting them, actions that back then, were apparently unknown even to the firm’s own traders? On the surface, it certainly appears to be another classic case of the fox guarding the henhouse,”  Kim Reports.

Full Story: HERE

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