The blogosphere has been rife with conspiracy theories that the silver ETF doesn’t actually own the silver it says it does.
“At BlackRock, we take the responsibility of protecting shareholder interests very seriously and spend a lot of time constructing our iShares products to help ensure they meet investor expectations,” BlackRock’s Feldman wrote. “In the case of SLV there are multiple safeguards in place.”
He noted that the ETF is structured as a grantor trust “which means the trust (on behalf of its shareholders) has the legal right of ownership to the silver it holds.”
Feldman said J.P. Morgan (NYSE: JPM) provides custodial services for storing the silver but has no legal rights to the ETF’s silver holdings. Additionally, investors can monitor the serial numbers of all the silver bars in the trust, while the silver is audited independently, he added.
Full disclosure: Tom Lydon’s clients own SLV.