EDITOR NOTE: Many of the Reddit traders who temporarily gave the silver market a boost in early February did so by purchasing the State Street Global Advisors silver-backed ETF. Supposedly, by owning this ETF, you own the actual metal backing it. As the journalist below shows, trying to gain access to viewing the silver under your ownership is nearly impossible. The London silver is kept at secret vaults owned by the Bank of England and HSBC. No silver owner can ever be told the location of the vaults out of fear that visitors may be listed as “potential kidnapping victims.” If you can’t see the silver or gold you own, then how is it possible that you can claim ownership over the metal? So, these traders may own the metal but they can never see it or gain access to it. This echoes what we’ve said several times before: just because you own gold or silver on paper doesn’t mean you own the metals. You own a “substitute” for the metals’ value; a promissory note that can never truly deliver on its “promise.” And what if you’re in a situation where you actually need to convert your paper into physical metal coins or bars? Good luck! The only way to have ownership over either metal is to purchase non-CUSIP gold or silver and to store them away at a private depository. Why own a paper substitute that gives you the “illusion” of ownership when you can own the real thing?
Many Reddit-informed traders own silver through an ETF. They might technically own it, but they probably will never be able to visit their holdings. Bloomberg’s Dani Burger has more on the secret vaults that hold silver and gold around London.
Originally posted on Bloomberg