Let's first talk about brand power. A few years ago our local supermarket recently started selling their own mobile SIM card - I remember being really surprised that they had launched their own carrier and for a little while I was awestruck by the power of their monopoly (which here in the antipodes includes not just grocery items but also key markets like petrol, hardware stores, etc). It wasn't until my internet service provider started offering their own mobile SIM cards that the penny finally dropped and a bit of investigation revealed that these 'brands' will piggy-back on the infrastructure of one of the major providers (for example iinet uses Optus), normally offering slightly different price packages. Bottom line it's the same service in different wrapping paper, but it's beneficial and convenient for all parties involved because it reduces overall cost and allows economies of scale while still retaining brand identity and (I presume) maximizing market share.
In the world of metals, it is common to do similar - using the vault as a custodian (the classic example is Goldmoney and BullionVault, using Viamat or Brinks). For some reason, Mr Sprott has NOT opted to get the entirety his metal shipped to Canada for safekeeping (like PSLV). Instead, he's making use of some custodians in various locations around the world. Don't just take my word for it (original link):
The bullion is described as segregated so by definition we can assume it is housed in the same facility with other bars (belonging to others). The other (stated) locations are London and Zurich, known centers for vaults. We have records in the database for 11 Palladium funds and 14 Platinum funds, so let's use the data to get some correlations.
The starting premise is that some unique bar signatures in Sprott's new list, may have been seen before in other data, especially since the funds are new ... i.e. we ought to seem some evidence of 'Jumpers', bars which appear to jump from one fund (or vault) to another*. This is easy to do with the database, we can also use our charting software to visualize the result.
We found some matches, specifically ~6 % for Platinum (35 matches from 557 bars total) and ~7% for Palladium (138 matches from 1896 bars total). Here's what those 173 bars look like when plotted together across a 365 day period. The bars go missing (dark) for a time before we see them show up on the 6th March 2013 bar list data from Sprott .... one pixel represents one day (we also have two bars show up in Sprott's which have been 'missing' since 2011 so they don't show up on this 365 day chart, appearing as a horizontal gap).
|Legend. Sorry about the colors, I will get this consistent one day.|
Either way, the Sprott supporters now have a conundrum - is Eric now in possession of non-existent 'paper' metal or is it the other way round ... did he get real metal once held by JP Morgan who also held real metal? Further, if you trust in Sprott's verification of the custodian then how is it possible to distrust other funds which may use the same custodian? I could go further and chart the serial numbers of each refiner to identify Eric's metal like we've done with the Johnson Matthey bars, but I think you get the picture at this point.
p.s. some of the bars are clearly marked as being manufactured in 2010, so there is no chance to re-use the 'warm from the refinery' spin, in case you were wondering.
* The 'Jumper' concept was explored in depth in SLV Database 3.
** The details of the 173 bars identified as Vault Jumpers can be downloaded from this location. You can compare these with any of the historical documents from a year ago: ETF Securities (JPM_US_Palladium Bar List) & JPM White Metals Basket for verification (you'll need to merge all the palladium and platinum worksheets).