The manager of the largest exchange traded fund for silver has issued a rebuttal of speculation the ETF doesn’t actually hold physical bullion.
The iShares Silver Trust (NYSEArca: SLV) rose more than 2% in early trading Monday as metal prices rallied again.
Kevin Feldman, a managing director in the iShares unit of BlackRock, in a recent blog post refuted talk the ETF holds leased silver or derivatives.
“I recognize we live in a skeptical time, especially following the events of 2008, and it’s smart to question whether your investments are doing what you think they should be doing. One of our key tenets here at iShares is transparency, which means we make every effort to educate potential investors on how each ETF works and what it holds,” Feldman wrote.
“In the case of SLV, it’s a very straightforward answer: silver,” he said.
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.