Thread by @profitsplusid

1/ The #PhysicalVersusPaper discussion and the effect on silver’s price can be a heated topic. Part of the last “#spaces” event we touched on various #derivative products constructed by BofA and JP Morgan.

2/ Expanding on this topic where #Silver (the actual metal) is used as a ploy to create publicly traded #investments, let’s look at 2 more traded #securities.

3/ Just like buying processed food, what is on the front of the box may not necessarily have anything to do with the actual ingredients listed on the back label. Remember to read the #nutritional facts in the prospectus before consuming.

4/ The Invesco DB Silver (Fund). Sounds harmless and wholesome. For a silver #investor owning a fund with the word silver feels like you are eating organic and healthy. However, look again. The fund seeks to track changes,

5/ whether positive or negative, in the level of the DBIQ Optimum Yield Silver Index Excess Return™ (DBIQ Opt Yield Silver Index ER or Index) plus the interest income from the Fund's holdings of primarily US Treasury securities and money market income less the Fund's expenses.

6/ This isn’t your mama’s home cooking. The fund takes US government #Treasuries and agency debt, collateralizes them and uses that leverage to buy silver futures. What could possibly go wrong?

7/ What income the fund receives from the debt securities is eaten away from the .76% expense ratio. Here is the performance since inception.

8/ Next down the perishable food isle is the Credit Suisse X-Links Silver Shares Covered Call ETN. At least the name of the fund drives enough curiosity to read the warning label.

9/ SLVO offers the returns of a #CoveredCall strategy comprising long shares of a #physical silver #ETF (#SLV) and short 1-month call options with a strike price of 106% of SLV. With a .65% expense ratio and not much tax efficiency on the #income, let’s look at the performance.

10/ Obviously, this is not investment advice. Buying milk after the sell by date, no matter how organic it sounds, usually is not a good idea. Yet these funds hold #millions of #dollars and effect the price action of silver with their large derivative exposures.

11/ The silver paper markets react to many #trading #strategies on a daily basis. These are just 2 more that create whipsaws in the paper price.
Will discuss this and much more in the #Spaces event today.

https://twitter.com/PalisadesRadio/status/1514642192547004417?s=20&t=5hNVUUDMj64JYbCA1-nj6g