Many of you are familiar with the shell game street-scam, most  commonly encountered in NYC, crafted to fleece money from unsuspecting tourists.  As it turns out, it’s quite probable that the silver and gold bar custodial business is likely one big shell game.

“If the above 14 ETFs see continued investment inflows, they will all have to compete for the available silver in London which is not already held within these ETFs. And that available silver is at an historic low, some 3000 tonnes or so. A few more days of inflows like the ones seen over 29 January to 2 February would be a major emergency for these ETF providers, particularly the iShares SLV. Because there is just not that much physical silver left in the vaults of JP Morgan, Brinks, Malca-Amit, Loomis and HSBC, which is not already reported as being in these ETFs.

And lets not forget all the unallocated silver positions which are outstanding which are claims against the bullion banks for silver which they have not got. Anyone with deep enough pockets could now cause a serious run on the remaining available silver stored in London that is not currently attributed to the above ETFs.”

The quote above is from a must-read analysis by Ronan Manly on the rising shortage of “free float” silver bars in London and NYC bullion vaults – Houston, we have a problem: 85% of silver in London is already held by ETFs.

As an example, and it’s something I have not considered, 67.4% of the “eligible silver” reported by JPM in its Comex vault belongs to SLV.

More of interest to me is the fact that only 27% of SLV’s claimed silver is held by JP Morgan, the ETF’s silver custodian. This is a problem because the use of sub-custodians for 73% of SLV’s silver makes the reporting of SLV’s bar list even less reliable than it is already.

This is because provisions in the Prospectus for SLV (and GLD, for that matter) make it difficult to conduct a bona fide independent audit of sub-custodians when sub-custodians are used. For anyone who questions this assertion, peruse this document, in particular section 2.8: SLV Custodian Agreement.

This past Friday I was part of a group discussion led by Chris Marcus (Arcadia Economics), who just got off the phone with a representative from iShares, the Sponsor of SLV.   Chris commented that his conversation with the rep “did not inspire any confidence” in the reliability of the bar list reports released daily.  As it turns out, the last inspection of SLV’s silver was in March 2020, right before the price of silver slammed in the papar market.

Under no uncertain terms, this “inspection letter” is not an independent audit of the bars claimed to be held by JP Morgan as custodian (27% of the alleged bars) and JP Morgan’s sub-custodians (73% of the alleged bars), the latter of whom have little to no direct accountability per the terms of the Prospectus.

As it turns out, Rob Kienz of, who happens to be a former auditor had nothing good to say about that inspection letter.  In his words: “that report doesn’t do much for me, as an auditor.”  Here’s his analysis:

It shows they (JPM) have metal, not who ultimately owns it. And I am talking about the silver in their vault, not Brink’s. So they have a bar report and the bars match. Great. Did they audit the transaction receipt for the metal to conclude where it came from, and under what terms?

Unlikely, therefore you cannot tell if it is leased gold or taken from someone else’s account on a different bar list. This is something [Nick] Barisheff and I agree on. Chris, ask him about this on your show please as more people need to understand this. Scope of the audit matters a lot.

Another issue is remelt – the metal could have been taken from another account, remelted, and issued a new serial number so it can never be tracked. Same thing happens with gold.

The audit report is very limited in scope and proves only that there is silver in the vault. It also does not prove that they haven’t used it in some other derivative contract and aren’t just storing it in their vault for show.

And again, SLV share holders can’t get it, so it is inconclusive how much utility the shares have, if any. A share on top of metal that cannot be redeemed for it – meaning the share is only worth the silver price cash equivalent, assuming that silver is titled clear to the trust and can be sold.

In truth, while both GLD and SLV purport to be fully-backed by gold and silver, respectively, there is very little in the way of legally mandated accountability. The first step would be an immediate bona fide independent full audit of both Trusts. Short of that, and the legal structure of the Prospectus for both Trusts makes a random independent audit impossible, it’s likely that SLV (and GLD) are little more than common street-level shell games.