View Full Version : iShares Silver Trust ETF Files S-1: Set to More than Double

Chris Mullen
29th September 2006, 11:39

On September 27, 2006 the iShares Silver Trust [AMEX: SLV] filed a S-1 to register 15,222,727 shares at a proposed maximum offering price of $110.00 per share for a maximum net offering proceeds of $1,674,449,970.

As of 09/28/2006, iShares Silver Trust showed 104,323,655 ounces of silver in the trust or 3,244.8 tonnes. This represented 10,450,000 shares. Thus the registration of the S-1 this week will effectively increase the amount of shares and silver by just under 150%.

29th September 2006, 12:01
Wow! If I am reading this correctly than they will be adding about another 150,000,000 ounces to the trust! Where are they going to get all of this silver? My last look at even the governments stockpiles showed that they don't even have that much left if I remember correctly. :shock:

If I weren't already loaded up I would be now!

29th September 2006, 12:07
Long term, this is obviously a bullish development. Looking into the numbers, 1 share of SLV currently represents just over 9.98 oz of silver. At a price of $110/share, that's just under $11.02 per ounce. This being the maximum issue price, that forecasts a retest of recent lows in the mid $10 area. So, it's down from here . . . to a great buying point. All depends on how you look at it.

29th September 2006, 14:11
Yeah, that would help to explain the mild delay in delivery of the physical stuff I recently ordered. :lol:

30th September 2006, 20:28
The pieces of this mysterious silver puzzle are falling into place.

Barclays has been the major source of the huge volume since 9-11-06, when the silver correction got into full swing.

On Sept 27 it was Barclays that was the mystery buyer in the Sydney market. By my count 28 million ounces were gobbled up in about 6 hours, with the price remaining at about $11.35 the entire time.

Who was the seller? My guess Australian and other British connected mining companies that have been squirlling away product since early August. On August 11 they test fired the buying/selling strategy in the exact same markets. I have those charts as well showing steady buying at 3 contracts/minute with no price change over hours and hours of trading.

What's in it for the silver mining companies? A floor at $11. Forever.

What's in it for Barclays? That's the best part.

They are going to legally corner the silver market, protected by their legitimate stock sales in the silver ETF, and thus be in a position to regulate the price of silver...but why?

The Brits have had it with Bush, and even the American people. They smell the doom of the dollar, and in fact all fiat currencies including the pound. They are not going to go down with the ship. On the contrary, they are going to head everyone else off at the pass.

When the moment is right - when the world begins to panic about American debt and the sharp drop in consumer spending that will usher in a worldwide recession or worse, the British are going to announce that the British pound is "now backed by silver". Who won't rush to trade in their fading dollars for shiny pounds.

Sound insane? Perhaps it is. But nothing is more insane than the US economy right now. If this plan is real, I'm behind it all the way. I suspect that they have already bought all the silver they need. When the recent volume spikes in silver return to their "normal" levels, which I suspect will be as soon as Monday (they wouldn't have made the announcement until they secured the goods so as not to create a buying rush) , then that will confirm that SLV has what it needs. It bought everything between 10.50 and 11.50. $11 is in all likelyhood the new, permanent floor for the silver price ladies and gentlemen.

In order to dispel rumours like the above, between now and the date the shares will be offered, the price of silver will crash. This is when institutional players will get to have a taste, which will spike the price back up as fast as it went down, causing us poor joe sixpacks to miss out once again). After the shares are all sold, silver will head in a straight line to $20...or $200.

Watch for silver to break from gold entirely. It already has been acting like an independent child all summer. Also watch for gold bugs to be left in the dust...for while at least, as gold's attention has allowed this silver coup to unfold with nary any notice.

I'm a sucker for drama. I'm getting an eyeful at the moment. Believe any of the above at your own fortune or peril.


1st October 2006, 08:25
Anyone have an educated guess ?


1st October 2006, 21:39
The price has been creeping up and Hong Kong volume is the same as Friday...


The pattern is:

Up in Asia...
Taken down in London
or NY.

The size and duration of any price drop will be a clue to sentiment or trader rumours, if any, ATP.

Watch the volume for spikes...either way.

Collect your emergency powder. Be patient. Watch. Keep your mouth shut as well.

This is the perfect forum to log all of this. There are only a few of us here right now. I could care less about gold ATM.

We are the silver people.

It's now October. This is the month of the 1929 crash. It is also the month of my 10 year AA anniversary. Sobriety has never tasted so good.

I'll be up all night drinking espresso and smoking cigarettes and watching "The Silver Screen".

See you later.


2nd October 2006, 04:01
Between David Bond's "Is Anybody Home? (http://news.silverseek.com/SilverSeek/1159651459.php)" and Chris Powell's "Is silver ETF preparing to clean out Comex or just divert demand? (http://news.silverseek.com/SilverSeek/1159650600.php)" I would have to say the latter is a much more responsible and useful analysis of the situation, though even it entertains only the extreme possibility of completely unbacked iShares paper. My guess is that Barclay's was a part of the high silver volume and that the ETF shares will initially be backed, but that the physical silver will increasingly be leased out to absorb increasing demand, which WILL effictively give Barclay's an OPEC -like corner on the silver market. Silver remains, however, a relatively minor part of the inflation/deflation cycle that determines central bank overnight lending rates. For whatever reason, the Labour government of the UK and the GOP republic of the US tend towards working in synch and it is likely that a major banking firm in Britain would be sympathetic to the political interests of the GOP in America in timing and announcing their purchases. The systematic buying of futures contracts so as not to affect price seems responsible, not manipulative.

The long term supply/demand fundamentals and the realities of fractional reserve lending of themselves make an $11 floor in silver likely, absent any ETF intervention, though silver could go still below $10 short term and retain its longer term bullish outlook. If the Barclay's announcement signals a downturn in futures buying, then the retest is very likely. At least some further concerted selling in NY markets is possible under numerous scenarios, but is especially likely if the feel-good, pre-election, pre-holiday message of prosperity spins the major stock indexes to dizzying new heights, absorbing capital and eclipsing thought of Fed rate-cuts. But where the announcement of a silver-backed British pound comes from, or what supports the proposition, is beyond my knowledge! Otherwise, my views on the forces driving price fluctuations and future outlook are well documented on this site.

2nd October 2006, 07:38
Silver jumped 19 cents in just over a 9 minutes...

The news on CNBC this morning is full of disguised but palpable fear. The Foley debacle has even CNBC Kudlovians now declaring a probable democrat takeover of the House in November.

Barclays also aired its first ad, and the tag line was something like:

"Barclays - quiety taking over the financial markets." ROFL

Thanks for all your input oro. And remember:

"Don't call it Frisco!"


2nd October 2006, 08:24


The sponsor is a Delaware corporation and a subsidiary of Barclays Bank PLC. The sponsorís principal office is located at 45 Fremont Street, San Francisco, CA 94105.

(arranged for the creation of the trust, the registration of the iShares for their public offering in the United States and the listing of the iShares on the AMEX.)


The Bank of New York, a banking corporation organized under the laws of the State of New York with trust powers, serves as the trustee. The Bank of New York has a trust office at 101 Barclay Street, Floor 6E, New York, New York 10286.

(day-to-day administration of the trust. This includes (1) processing AMEX orders (2) receipt and delivery of silver to custodian(3) calculating the net asset value and the adjusted net asset value of the trust on each business day; and (4) selling the trustís silver as needed to cover the trustís expenses.)


JPMorgan Chase Bank N.A., a national banking association, acting through its London branch, serves as the custodian of the trustís silver.

(safekeeping the silver in London...)

San Francisco...
New York...

They spread themselves out pretty good. I wonder why?

"As an owner of iShares, you will not have the rights normally associated with ownership of other types of shares.

"Shares are not entitled to the same rights as shares issued by a corporation. By acquiring iShares, you are not acquiring the right to elect directors, to receive dividends, to vote on certain matters regarding the issuer of your iShares or to take other actions normally associated with the ownership of shares. You will only have the limited rights described under ďDescription of the iShares and the Trust AgreementĒ.

"As an owner of iShares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, or the protections afforded by the Commodity Exchange Act of 1936.

"The trust is not registered as an investment company for purposes of United States federal securities laws, and is not subject to regulation by the SEC as an investment company. Consequently, the owners of iShares do not have the regulatory protections provided to investors in investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain limited circumstances) or limit sales loads do not apply to the trust.

"The trust does not hold or trade in commodity futures contracts regulated by the Commodity Exchange Act (CEA), as administered by the Commodity Futures Trading Commission (CFTC). Furthermore, the trust is not a commodity pool for purposes of the CEA, and its sponsor is not subject to regulation by the CFTC as a commodity pool operator, or a commodity trading advisor. Consequently, the owner of iShares does not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools. Consequently, the trustee is not subject to registration as a commodity pool operator and the owners of iShares do not receive the disclosure document and certified annual report required to be delivered by a commodity pool operator.

"Neither the sponsor nor the trustee has experience with a trust the only assets of which are expected to be silver. Their experience may be inadequate or unsuitable to manage the trust.

"None of the sponsor, the trustee, or their respective management, have experience handling an investment vehicle designed to reflect, at any given time, the value of the silver that is its only asset. If this lack of experience adversely affects the operations of the trust, the value of the iShares may also be adversely affected.

"The value of the iShares will be adversely affected if silver owned by the trust is lost or damaged in circumstances in which the trust is not in a position to recover the corresponding loss.

"The custodian is responsible to the trust for loss or damage to the trustís silver only under limited circumstances. The agreement with the custodian contemplates that the custodian will be responsible to the trust only if it acts with negligence, fraud or in willful default of its obligations under the custodian agreement. In addition, the custodian has agreed to indemnify the trust for any loss or liability directly resulting from a breach of the custodianís representations and warranties in the custodian agreement, a failure of the custodian to act in accordance with the trusteeís instructions or any physical loss, destruction or damage to the silver held for the trustís account, except for losses due to nuclear accidents, terrorism, riots, acts of God, insurrections, strikes and similar causes beyond the control of the custodian for which the custodian will not be responsible to the trust."

Can you believe this crap?


3rd October 2006, 15:55
concerted selling in NY markets is ... especially likely if the feel-good, pre-election, pre-holiday message of prosperity spins the major stock indexes to dizzying new heights
I think that's a pretty fair description of what happened today.

4th October 2006, 07:51
..in regards to my claim that the metal has already been bought...and wondering who at the Trust is reading this forum:

Silver ETF share registration increase doesn't require metal purchases
Submitted by cpowell on Tue, 2006-10-03 00:15. Section: Daily Dispatches

Barclays Files to Add Shares to Silver ETF

From Reuters
Monday, October 2, 2006


NEW YORK -- Barclays Global Investors on Monday said it had filed with the Securities and Exchange Commission to register 15.2 million new shares of the iShares Silver Trust (SLV), which has proven popular with investors as a silver play this year.

"It provides us with flexibility," said Barclays spokeswoman Christine Hudacko.

The registration would almost double the amount that could potentially be invested in the trust to 32 million shares.

iShares Silver Trust is traded on the American Stock Exchange. Barclays launched the exchange traded fund in April with a cap of about 16.8 million iShares available for investors.

"We are registering additional shares. That does not mean the trust is automatically going to buy additional metal," Hudacko said, adding that the SEC requires that a ceiling be established for the size of the fund.

The ETF is backed by silver bullion stored in vaults in allocated accounts. Each share is worth 10 ounces of silver, meaning that, fully subscribed, it could now hold 320 million ounces, an increase of 152 million.

Investors must buy the shares before the trust administrators will buy the bullion to back it. <end>

Fair enough. But isn't it also curious that there has been a huge trading volume in the last three weeks...that is still ongoing.

Who is so suddenly interested in hundreds of millions of ounces of silver? Not Barclays obviously.

Funds may be getting out of commodoties by the boatload...but someone is buying all they have and buying it at $11 an ounce on average...the same price level the Trust says it will sell the shares at.

This someone or those someones now have hundreds of millions of ounces of silver in their possession...why would they pay $11? Did those someones learn of the iShares plan to add to the trust and are they trying to head Barclays off for some sort of future buying squeeze?

But wait a minute...iShares doesn't even need to buy the metal [automatically]. Maybe they won't need to buy the matal at all after this last blow off and rush by big money out of the silver market. So Barclays isn't the source of the recent and ongoing daily volume spikes. Fair enough. I apologize to all the good people at Barclays and wish them success with their trust.

And now back to the point.

Who is buying up all the silver and why are they doing it now?

4th October 2006, 14:54
Perhaps I'm wrong, but I don't interpret this article in the same way, Richie. I take it to mean that Braclay's is not required to buy physical silver until after shares are sold, or at least concurrently. The physical silver is bought in baskets of 500,000 ounces, which correspond to 50,000 shares of SLV. So basically, rather than buy all the silver for the intended shares at one time, Barclay's only needs to buy as the baskets of shares are created, if at all. Of course, they will seek to do this at a profit, selling shares at a higher price than they paid for the physical silver. My concern at the announced $110 price was the implicit assumption that Barclay's would be able to acquire physical silver for cheaper -- which wasn't true at the time of the announcement, but is now.

To be clear, in no way is Barclay's given license to create new shares of SLV without possessing the physical silver, but there is nothing in the rules of the ETF or the volume of silver trading that makes it clear whether Barclay's already has acquired all the silver for the shares they're going to create or if they are buying in increments as the shares are sold.