1/For any fiduciary, institutional or individual investor considering precious metals and wants to understand the real structural risks between owning physical metals held directly vs ETFs in a brokerage account, this research is for you.
2/As manager of a physical gold and silver fund and the owner of a large Depository, I understand the nuances between price representation vs actual ownership of precious metals.
3/Although, investors use ETFs for price exposure, they will be shocked to understand that is all they own…the price for that moment.
4/First lets go back to the Gamestop/Robinhood fiasco. That event uncovered a bonafide true systemic risk of the system. See the following video to understand what a real liquidity crisis means for anyone with a brokerage account as well as
5/the domino effect to other brokerages, banks and clearing members.
6/Another systemic risk is building infront of us; except this is to the potential downside. Unlike Robinhood not allowing new buying in shares what if institutions say no more selling and halt trading to protect the system?
7/The latest margin data released by Finra through January 2020 shows margin debt levels up 2.6% month-over-month to a record high. advisorperspectives.com/dshort/updates…
8/Trying to diversify from a systemic risk event with a traditional brokerage account is very difficult. Failures in liquidity and counterparties create a multitude of cascading events. Although extreme, just ask the dinosaurs (who had great diversity until the asteroid hit).
9/What many do not understand are the inner workings of the financial system and what that means to the average brokerage account holder.
10/What we thought we saw on our brokerage account representing true ownership was merely a mirage. The registered owner for all shares held in a brokerage account (street name) belong to Depository Trust Company (DTC).
11/To confuse matters more, Cede & Co. (a partnership within DTC) is listed as the registered owner and not you. Welcome to America! dtcc.com/settlement-and…
12/The ultimate investor is just considered a beneficial owner. investor.gov/what-registere…
13/And to understand the difference between registered and benefical owners, look no further. investor.gov/what-differenc…
14/To explain this more clearly, lets look at a ETFS Silver Trust filing with the SEC. “The Securities will be issued as fully-registered securities registered in the name of Cede & Co.”
15/“all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co.”… “DTC has no knowledge of the actual Beneficial Owners of the Securities” sec.gov/Archives/edgar…
16/GLD prospectus pg 30, “Individual certificates will not be issued for the Shares. Instead, global certificates are deposited by the Trustee with DTC and registered in the name of Cede & Co., as nominee for DTC.
17/The global certificates evidence all of the Shares outstanding at any time.”
spdrgoldshares.com/media/GLD/file…
18/Due to structural/operational risks and potential inability to take delivery of precious metals within ETFs described in more detail here, what is the purpose of a precious metal ETF?
19/Well just ask a boat owner… “The two happiest days in a boat owner’s life: the day you buy the boat, and the day you sell the boat.” However, if the boats sinks between between these dates that becomes your liability.
20/The ETFs are trading vehicles. In the case of precious metals, they represent nothing more than price volatility.
21/Many of these ETFs are structured as indenture trust or grantor trusts. These trusts are not an investment company registered under the investment company act of 1940.
22/Physical metals held directly either within arm’s reach or in a segregated and insured vault without any intermediary, is the best way to reduce risk. I explain this further with this interview. macrovoices.com/podcasts-colle…
23/Fiduciaries & investors must understand the benefits of physical metal as well as the simplicity of having direct control of your assets during systemic risk.
24/If the financial system takes on water, physical metal held directly has no counterparty and nowhere is Cede & Co. stamped on the bar.
25/If this does not provide clarity and you still have questions, please reach out or provide feedback. I also ask that this article be passed onto others so they understand the important distinction between 2 entirely different investment structures.

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More from @profitsplusid

4 Mar
1/21 I have been asked by many people if there are any LBMA vault custodian or subcustodian concerns. Upon investigation this is what I found. Auditing responsibilities of LBMA vaults in London may surprise you.
2/21 Are audits required by the LBMA for vault custodians or are audits the responsibility of the customer storing the metal? The following information is supported by publicly available documents.
3/21 In a February 3, 2014 letter to the SEC, a law firm representing Brinks discusses custody and transportation services in both the USA and United Kingdom.
sec.gov/divisions/inve…
Read 22 tweets
15 Feb
1/16 Attention PSLV owners. We have seen a lot of news over the weekend with the prospectus changes in the silver ETFs. When investing in securities like ETFs, trusts, and structured products it is vital to read and understand the terms.
2/16 Please keep in mind, the following is meant to be educational and informative. I can not stress enough the importance of physical metal over any paper claim. Even when these paper claims are held in high regard.
3/16 I noticed something very strange which absolutely no one has picked up on. Many have cited the SPROTT PHYSICAL SILVER TRUST “PSLV” as an alternative to SLV or other ETFs. PSLV has been announcing additional deliveries of silver into the trust recently.
Read 17 tweets
5 Feb
From January 28 to February 2, 118,450,000 shares were created. This coincided with a $4 move higher. Over the next 2 days, SLV’s shares outstanding fell 19,450,000. This represented a 16% retracement, yet the price of silver fell all the way back to 26 or a near 100% retracement
There is a great deal of discussion that is questioning the drop in price and whether SLV has silver in the vaults. SLV reports everyday a Bullion Weight List report that itemizes every bar by Brand, Bar number, fineness, weight, and vault location. ishares.com/us/products/23…
SLV is certainly reporting metal in the Custodian and Sub Custodian vaults. To say there is no metal would be saying this 10,843 page report is completely fictitious. I do not believe that is the case since that could be considered outright fraud.
Read 19 tweets
3 Feb
This has been an extraordinary moment in history for the silver market. It requires a thread to demonstrate the shear amount of money that is coming into the SLV etf. Information about SLV can be found here ishares.com/us/products/23…
The following is from the section "Description of the Shares and Trust Agreement" in the SLV offering prospectus: Each SLV Share represents a fractional undivided beneficial interest in the net assets of the Trust.
As of 2-1-2021: total ounces in the Trust was 620,563,793 and total shares were 667,750,000. Each share represent approx. .929 ounces. Therefore, 61,350,000 new shares represents 56,994,150 new ounces .
Read 9 tweets

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