Eric Sprott's Third Bar List for PSLV

At the end of September 2012, Eric Sprott's funds quietly released an updated bar list, marking the third document for PSLV (and the fourth for PHYS). In light of this stupendous event, I felt it important to analyze the document!

When to buy silver?

One of the more enjoyable rewards of writing for this blog, aside from the hedonistic pleasures of being GM Jenkins' official beard trimmer, is that I (and the others) often get nice emails from readers. Sometimes they're just to say, 'hi', or to say thanks for an article they liked. Sometimes they expand on points raised on the blog, or they ask for advice. I always do my best to reply to each one. But one common theme that comes up again and again is 'when should I buy gold/silver?' 'What's a good entry point?' Or, occasionally, 'Should I be selling?'

Of course the only truly honest answer to such a question is, 'Dear X. No idea, Guv. Yours, JdA.' That said, I also often think I could probably write 5,000 words on the subject without breaking sweat. It's such a big question, and one that all our readers and contributors probably ask themselves at least once a day.

I received one of these emails last week and so - rather than just giving my opinion - I thought it might be interesting for Screwtape to do its first ever joint post. So today five of us will be setting out our brief thoughts on this most pertinent and popular of topics. We all prepared our answers independently, with absolutely no collusion, to see what the results might be...

When should I buy silver?

Robert Leroy Parker: My non-expert opinion says not right now. In fact, imo, right now is the time to be exiting your silver positions in preparation for the next economic wave of catastrophe. The collapse of Bear Stearns was a 5-month leading indicator to the far more devastating collapse of Lehman Brothers. MF Global collapsed at the end of October, so if history rhymes, we’re getting closer and closer to the next Wall Street blow up. The MF Global debauchery continues to get worse as noted in the NY Times last week. How much worse will the next casino implosion be? On a scale of “not so bad” to “epic disaster,” my money is on “the Mayans were right.”

Anybody that has bought and held silver before mid 2010, whether it be ETFs or physical bullion, has done very well. At worst, you’re near a double with silver at $34/oz. You would have outperformed the S&P by 60% if not much more. However, anyone that bought silver pre-Bear Stearns had to sit through a greater than 50% fall in 2008. The volatility of silver is a sight to behold, and from my view, it’s best to watch from afar, especially when the criminals running Wall Street and Washington D.C. remain in power.

I’m sure many will disagree with this assessment, and will point to silver bullion’s lack of counterparty risk as an advantage against the system. And while I would agree with you in a different era, I don’t think it applies to our current situation. Unlike gold, silver is primarily an industrial commodity; a deflationary wave of sufficient force will drastically reduce both demand and price (e.g. 2008). I expect gold to suffer a similar massive price drop if such an event should occur, but there is a little thing called freegold that keeps my gold close to my chest. Perhaps some will point to a future of bimetallism, but that is unrealistic in my opinion. The return of silver specie would vastly encumber industry, and it is simply not necessary to have two metals performing the same function, whatever that function turns out to be.

Bimetallism is an interesting subject however, so here are a couple of Milton Freidman papers on the subject that you may enjoy on your spare time: The Crime of 1873 and Bimetallism Revisited.

To conclude: When to buy silver? Imo, it will be a good time to consider buying silver when the ashes of Wall Street have finally settled. When the IMFS is no longer in a state of vast uncertainty, silver fundamentals will be far easier to analyze, and issues such as peak supply will come into focus. Currently, demand for silver as a monetary commodity makes silver a hazy investment, but I expect the situation to clear up within a year or two.

Louis Cypher: This is going to be quick and dirty: TA method: magic 8 ball, chicken bones and human entrails.

Looks to me like Silver is rolling over, and I expect it to drop tomorrow [written Monday evening - Ed.] as will most commodities. I expect a choppy Wednesday. Thursday and Friday are make or break.

If it drops I will use palladium as the windsock to judge the bottom. I expect palladium to bottom out at $675-650 and that will signal the end of the plunge across all commodities. $650 absolute, absolute bottom for palladium.

Warren James: In a nutshell, it depends what your goals are. If you want price exposure (because you believe you can increase your cash holdings by being in the silver game) then an ETF is your best bet - it's easy to use and liquidate, and the premiums are low. I have no trouble recommending SLV because all evidence shows me that they do indeed have silver in the vault! In fact, I recommend it because it's not PSLV (which has a premium jumping all around the place ... gave a listen to this guy, who basically echoes my sentiment - don't take his advice, but do observe his growing realisation about Sprott's fund; p.s. drugs are bad).

If you want to buy silver because you think it's a hedge against the global financial insanity taking place, then you're probably better off holding the metal yourself. But bear in mind that each time you transact in physical, you're paying a small premium to the dealer each time you buy, and each time you sell, which means that with short term trades on physical stuff, you're losing out a little with each trade (that's how the bullion dealers make their money), i.e. if you're chasing the price on short term gains then you may as well be trading an ETF.

So like any investment, it's purely an assessment of risk - what's acceptable to you and what's not. I personally am of the opinion that silver will continue to be volatile - mostly because I see that a pump is occurring ... from my research there appears to be no real shortage of silver, despite the many stories (and talking bears) ... and the big traders are using this to their advantage to skin the little people. The two silver corrections of 2011 personally made my nose bleed although I gained overall. I have realised that for my own purposes (of long-term wealth preservation) I am probably better off buying gold. If I was after quick cash then I would have done just as well (if not better than silver) with Jeanne's recommendation of buying Lloyds TSB (article link).

So, once you've done an honest assessment of (1) your personal investment goals, (2) your risk appetite and (3) your liquidity needs, then the rest of the answers are just a matter of putting in solid research and finding the guys who know their stuff (recommended link). For bullion purchasing, I recommend the Dollar Cost Averaging strategy - works nicely. For trading the spot price, I recommend reading GM Jenkins's weekly charts and paying attention to MACD and RSI. My recent strategy involved buying a big bunch of Silver ETF after the price plummeted dramatically. The strategy worked (for $ gain), which lent some confirmation bias to the idea of buying when there is blood in the streets.

Following from that, if you're actively trading the silver price then the recent $26/ounce was a gift. If you believe, like I do, that there are agents out there with an active interest of gunning the silver price up and ramming it down every four months, (and missed the recent one) then around about April or May you should have another opportunity shortly so keep your powder dry (or you could chase the pump). Some more hints to this timing including watching the premium action on PSLV, as well as the intensity of silver rumours - yes, I'm watching the strategic placement of silver memes in the social media, and using this as a leading indicator (go figure).

PS: I worked really hard to trump GM's cougar-on-coke analogy, but couldn't.

Jeanne d'Arc: I'm not a buyer at the moment - I'm a seller. I just sold a tranche from the silver stash I picked up recently at $26 - 28. If the price goes up, I'll sell another tranche, and so on. The final tranche will be sold hopefully just before silver inevitably crashes again or if (if) it hits $40 - whichever happens first. If the price goes down, I'll hold as I doubt it will crash far below my cost average, and my profits from selling the other tranches will cover any losses if it does. I will not buy silver priced above $30 for many years, as even this level is above the post-2009 trend line.

I'm something of a bête noire to the silverogosphere (perceptive regular readers may have picked up on this) - I trade silver to (hopefully) make a quid or two, and I don't have the slightest emotional attachment to it. It's not money, and it isn't going to be. I ditched it like a stone in April 2011 when the RSI went mental, and my only mistake was then getting back in too early, which cost me all my April profits (silly JdA).

As for all stocks, commodities, bonds, whatever, the decision about if/when to buy depends on (a) your planned holding time, (b) your risk appetite (and, linked to this, the scale of your proposed investment), and (c) the opportunity cost from not using your money to buy something else.

For (a), I don't think now's the time to be thinking too long term. If Greece exits the Euro, which it still may, then there will be a 2008-style crash, no question. The recovery may in fact be swift, but for a time money will pour into the dollar and you can say hello to $22 silver before you can mutter "I think I'd better log into my trading account". That's when you should buy.

Conversely, Mr Bernanke announcing QE III would give silver a lovely boost, certainly, but the same can be said for all stocks and commodities and frankly I think the upside is going to be greater for them than silver. But if you are thinking long term, and have the stomach to live through several silver crashes, then you could buy now. It's not at a crazy price, and there could be some nice upside left. But that brings us to (c) - what is the realistic upside for silver compared to other choices? My deliberately polemic article on silver vs. banking shares was essentially all about this opportunity cost. Where is the smart money going now?

But if you do really want to buy some silver, then the answer's pretty simple in my book. Do what the successful traders do. Be patient. Wait for the next crash. For silver, you can almost guarantee that you'll get one within 12 months (more likely six). Wait till the heart-ripping plunge is over, and for the dead-cat bounce to finish, and then buy. In the meantime, if you can't sit on your hands, then use your trading account to buy other things that have just been punished and then sell on their dead cat bounces, so that you can have more money with which you can buy your beloved silver when the time comes.

If you must.

Grundlemaster Jenkins: Though my contract explicitly states I'm obliged to write only one post per week, I have agreed to briefly contribute to this symposium in exchange for a small sack of adderalls that JdA keeps in her purse.

When should one buy silver? Right now! I arrived at this conclusion through a proprietary algorithm it took me several years to develop, which involves Markov chains, Bessel functions, Fourier-Stieltjes transforms of spherical harmonics, and the Quadratic Formula. But since I've heard that silver investors aren't the smartest lot, I'll explain my rationale using a somewhat simpler measure [don't lose your audience, GM... Ed.].

When was the last time silver traded flat for 15 straight trading days (I'll define flat as +/- 2% of an average value)? If you increase the range (percentage-wise) a bit, you'd have to go back to when silver traded between $17.50 and $19.25 throughout the summer of 2010, after which it did the straight shot to $30. The other two times in the recent past that silver traded flat for an extended period (though fewer than 15 days) was December 2010 and October 2009 (and check out the RSI during those periods: very similar to the action now). In December 2010 it popped up to close the year, and in October 2009, though it sold off ~8%, that only lasted 6 days, followed by a lightning fast 20% jump to its yearly high.

So, in short, if you wait, you might miss a strong move up, and even if you're lucky and it rolls over, you may not have a lot of time to get in at a lower price anyway. As I wrote in my post below, I don't see another waterfall correction in the works, so start building your position.

[Please consult your medical professional before taking my advice, as side effects could include dizziness, high blood pressure, glaucoma, and loose stools. This is silver after all].

Conclusion

To finish, let me point out that all of the above are just personal opinions, philosophies and rants. It is not investment advice (please read our disclaimer at the bottom of the page if unsure about this). In fact, it is the opposite of investment advice: this is a quick and simple exercise to show that there's no such thing as a guru who knows it all, who has privileged insight into the future, or who can painlessly guide you onto the path to fabulous wealth. Ask five blog contributors, and you'll get at least six opinions.

Sadly, the opposite is all-too-often true, and blindly following those who claim 'to know' will send you to the poor-house. So perhaps 'no idea, Guv.' is actually by far the best investment advice anyone could ever give...

What's the real premium for bulk silver purchases?

Strewth, cobber, the controversy surrounding premiums for bulk buys of silver continues to rumble on.

The basic premise was that the seriously wealthy would face huge premiums of up to 30% if they wanted to buy silver in large quantities. This figure is not as random as it might appear: it first started doing the rounds when Sprott's PSLV hit a premium of above 30% (peaking at 35% before his secondary offering on 18 January). In other words, such an extraordinary premium had to be justified in the silverogosphere by grounding it in fundamentals, viz. such an astonishing premium must imply a huge shortage in the silver supply.

This shoddy thinking reached its glorious nadir in Zero Hedge's abysmal pump of PSLV, as discussed here by Screwtape's Brian O'Flanogan; a number of commenters also waded in to patiently add to the debunking.

If that wasn't enough, Sprott's second issue caused the premium to collapse to 6%. This really should have been the death-knell for one of the most ludicrous of all the silver memes floating around on t'internet. I mean, if a premium of 35% implies a shortage, then presumably one of 6% implies a sudden glut in supply? Which would mean that Sprott's sudden large purchase of silver had somehow increased supply! It's enough to make one weep. This chart (courtesy of gotgoldreport.com) shows quite clearly just what a bad deal the holders of PSLV got in comparison with those of SLV:

But, one should never underestimate the resilience of silver religionistas memes. The facts never get in the way of a good bit of propaganda, even if all it takes is about five seconds' thinking to realise that the propaganda makes no sense at all. The great and the good of the silverogosphere continue to chant the new axiom that silver is unobtainable for less than a 30% premium when buying in bulk. The meme has legs, and all efforts to kill it at birth by the more rational parts of the community have failed.

I'm going to have one last go, before giving up. In recent private correspondence I was challenged to find ways of buying a million ounces of silver without incurring hefty premiums. So, I borrowed $34,000,000 from GM Jenkins (using the indentured slavery of my first born as security, as per his usual terms) and decided to do a bit of silver shopping. Here's what I found:

1. I could buy some silver futures contracts on the COMEX and stand for delivery. This way, I will get the silver at a spot price that I think will be a good price in the future (e.g. a few weeks ago, I could have easily picked up some futures for silver at $28 an ounce, which would have been a great deal; but even today, I could buy some futures at $34 an ounce quite cheaply). The costs associated with this will be the broker's contract fee and commission for the trade (a tiny fraction of a percent for such a large trade) and some storage or delivery costs once the contract is closed (again, this would be a tiny fraction of my $34 million order), plus some insurance. A bonus for conspiracy fans out there is that by doing this I'll be contributing to the collapse of the COMEX [/sarcasm].

2. I could buy and redeem SLV. Basically, this needs to be done in 'baskets' of 50,000 iShares. So my $34,000,000 will get me 1,031,553 iShares of SLV (before open of play on 29 January, silver is at $33.99 per ounce and SLV is at 32.96). So, let's say that I'll buy a round million iShares which will get me 20 baskets. The 'premium' will be what the iShares prospectus describes as 'applicable fees, taxes, expenses and charges'. One of these fees is $2000, which is neither here nor there if you're splashing out on $34 million of silver with GM's hard-earned cash. The rest adds up to just a few percent [if anyone can do this calculation more precisely, then I'll be grateful, and will add it to this post with an acknowledgement].

3. The Perth Mint is (at the time of publishing) selling silver 100-oz bars at 2.4% over spot (i.e. $34.65 as opposed to their last quoted silver spot price of $33.84 spot price) So, I'd need 10,000 of those. However, the Perth Mint Depository’s standard premium for 1000-oz bars is $0.20 per ounce over spot, which in practice would usually be stored in their vault. But for buyers of size (High Net Worth individuals), they will do “cash and carry” if requested and - for delivery to the USA by sea - an additional three to five cents over spot should cover freight. So purchase and delivery would come in at a rather tasty 0.74% premium. [Many thanks to Bron Suchecki of the Perth Mint for this information.] I'm sure every other major bullion seller around the world would also have similar fees and services for HNW clients and I wouldn't be surprised if there were some quantity discounts of list prices.

4. GoldMoney: If you don't trust the evil SLV, then perhaps you'll have more confidence in a White Knight in the form of James Turk. Here you can see GoldMoney's rates. Not surprisingly, the more you buy, the lower the rate. So a million dollars or more will get you a rather nice 'premium' of 1.99% for physical silver. And they'll deliver it to your house, if you like (although that will cost you a couple of percent extra).

I found about a million (well, half a dozen) other ways of getting my bulk purchase of silver for a low premium, but I don't want to labour the point...

So, to answer the exam question, 'what is the rate for bulk purchases of silver', it is between almost zero and 2%. That's quite a long way from 30%, I think you'll agree. Now, the die-hard cynics amongst you might say, 'well, that's all well and good in theory, but can you give an example of someone who has actually recently bought a large amount of silver without paying 30% premiums?'

Funny you should ask that. In fact, I know of a certain Mr E. Sprott of Toronto, Canada, who - according to the publicly available records of the PSLV Trust - has just bought 8 - 9 million ounces of silver (and rumour has it that he didn't even need to borrow the fiat off GM to do so...) I don't want to blatantly plagiarise someone else's work, so please check out Kid Dynamite's analysis, which shows quite clearly that Eric picked up his shiny stuff at very close to sp(r)ot(t) price.

Now this should come as no surprise. There are three incontestable facts about billionaires. The first is that they are very, very rich. The second is that they didn't get to be very, very rich by paying a 30% premium for something that they can get for almost no premium at all. And the third is that they tend to employ very smart, efficient people, who lose their jobs very quickly if they waste their employer's money.

So Sprott probably just got his people to buy his silver on the COMEX, at virtually no premium. Sprott cheerleaders on the silverogosphere then went around implying (again) that silver was in a shortage, and the premium-to-NAV proved this (even after it crashed).

It is, in fact, precisely this level of chutzpah which distinguishes filthy-rich billionaires from unpaid small-time bloggers whose eldest children are now condemned to spending the rest of their years darning GM Jenkin's socks...

Eric's Delivery (updated x 2)

Mr Eric Sprott likes to talk about how long it took him to get the first lot of silver for PSLV. Three months he said, which supposedly tells you how tight the physical market really is. His delivery is top notch – after all he’s a successful fund manager. But let’s take a closer look at his actual silver delivery. What I hope to demonstrate here is that rather than being sensational, his story is actually quite boring.

So as a second part of our series to encourage us all to question more closely the claims of those who promote silver as an investment, we turn to one of the most oft-repeated silver memes on the net: “Sprott had trouble sourcing silver because of how long it took to get his physical delivered”. And before anyone accuses me of being anti-silver, please read my recent ‘Silver Bulls’ post [link] where I basically speculate that the price of silver is about to smash all records. What I really want to do is question the dogma where people lap up the story (including me) and interpret it as being indicative of a tight physical silver market.

The PSLV bar list [pdf] says 22,298,542.936 fine ounces of silver. In round figures [calculator], this is 632 tonnes (or 632,153 kilograms).

Taking delivery of that much material is not the same as taking a delivery from Pizza Hut. Anyone who has taken delivery of a monster box (which you guys have in America) has would have an idea of how heavy physical silver can be. Anyway, shipping that much weight is a logistical challenge, so let’s explore. But let’s ignore insurance paperwork and shipping ports, customs, etc., since I still don’t know where Sprott bought his silver from, although it stands to reason that some of it must have come from overseas. I DO have knowledge about the weight limits for a shipping container, and it’s really easy information to find if you want to check for yourself [search].

A 20-foot shipping container can hold approximately 20 tonnes maximum. This is both a structural limitation as well as a road-transport maximum (the road tonnage limit varies from country to country). A 40-foot container is double the size but similar restrictions apply – i.e. not necessarily double the weight – my research shows one 30-tonne limit for a 40-foot container.

Using our average, if Sprott had to get his stuff to the Royal Canadian Mint for storage – he would have needed approximately 31 shipping containers to do it. Here is the visualization (using 20-foot containers) of what that looks like, and my digital people have loaded the first one onto the truck already, thirty to go!

Then there’s the forklifting involved. In my research I found a picture of the vault of the ZKB Silver ETF, which shows an example of silver stacking which should make us all envious. This isn’t an article about ZKB, I just wanted to show a photo of what silver bars typically look like when they are stacked on a pallet (e.g. for transport).

What you’ll see above in this picture roughly confirms my research:

“a 1000oz silver bar is approx 12cm x 9cm x 33cm (width x height x length) and they pack 1t per pallet in two layers of 2 bars wide by 8 bars deep = 32 bars, so excluding the height of the pallet, 1t would take up approx 96cm x 18cm x 66cm.”

Let’s say we have 1 tonne per pallet in rough figures, that means that Eric’s delivery required lifting and shifting approximately 632 of these babies – and requires pack and unpack. Here is another visualization of what that looks like (click for large version). The bulk of these are stacked 5 pallets high (each stack weighs 5 tonnes), except for the row at the end (32). Please note this is a visualization only - it is not likely that the silver was ever in a big pile until it was all stacked inside the vault (still on pallets inside?)


And the same view, different angle (click for larger versions of image)

From the above picture, it's pretty clear that this is one heck of a lot of silver to shift. No really – think about it … even if the refinery were just across the road from the Royal Canadian Mint, it would still be a huge job just based on the forklifting effort. Then add shipping times, road haulage, different suppliers, customs clearance, security, whatever else. Stepping back and looking at the practicalities of getting 632 tonnes of silver from multiple sources to Canada, the only thing I now find surprising about the fact that it took Sprott three months to get his silver is that he was able to do so quickly!

So even disregarding the stories of still-warm-metal-bars … if there are any experienced logistics managers out there, please let me know your opinion of whether taking 12 weeks to ship and pack these is about right or way off. Please anyone let me know if my mathematics is wrong, I'll happily adjust the figures or (and publicly amend my statements) if I’m proven wrong with my calculations.

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Updated 17th August 2011 - thanks for all the opinion and feedback from everyone. I received a comment from Bron Suchecki by email, am adding the content to the bottom of this post because the blogger comments system seems to be malfunctioning at the minute. Bron introduces a rather excellent twist to the plot - the possibility that Sprott himself got diddled by whomever he bought the silver from - and to that extent Eric fully believes the 'shortage' association by virtue of his PSLV purchase experiences:

Bron said .."Having trouble posting this comment to your post, could you put it up for me:

Precious metal vaults are not like distribution warehouses with space for 20 trucks to load up a one time. Most would have one dock or two.

And yes it isn't just unload, thanks mate, see you later. You are checking off each bar against the supplier's bar list.

So even if the metal was across the road it would take some time.

As to the purchase, I think what Victor and Kid guess is probably how it was done. You would certainly buy in smaller lots over a few days so no one in the market knows you are a large buyer. My guess is he bought it loco USA, not London.

However, it did not need to be done as forwards. Each lot could have been done as spot unallocated and on t+2 requesting immediate conversion to allocated (held in London). Then you take 3 months to get it shipped from London to Canada. This means you have no counterparty risk as it is off balance sheet allocated and all at the cost of about 3 cents per ounce for shipment.

Contrast to the forwards, where if the counterparty fails, you now have price exposure. Yes you still have your cash, but have issued shares at a price based on the forward deals which you now have to scramble to buy at current spot prices. If Sprott did forwards, then as Victor says he was backing PSLV with "paper" temporarily and exposing PSLV holders to counterparty exposure to bullion banks.

There are a few possible reasons why it was done this way:

1. Kid's reasons - it allows Sprott to talk about the 3 months delivery time and let the bugs misinterpret that.

2. He relied on his bullion bank counterparts to structure the deal and got played. They would have recommended forwards as they can make more margin on the forward points and it takes pressure off their physical books as they just sub contract with refineries to deliver over 3 months ex-US as and when the refinery has the physical.

The best thing Sprott could do for the silver bugs would be to open a London metals account with a bullion bank. Buy silver in lots from different counterparties, with settlement to his London account. When all done call up the bullion bank and ask for a 600t allocation - shouldn't be a problem as SLV has done numbers like that on a number of days. That way he finds out if the daily huge movements in SLV are real. My guess is he'll never do it this way because they will deliver it. Then he has no story to tell.

Alternatively, Sprott's organisation is just not that cluey on the PM markets and just take their banker's advice. With the size Sprott is dealing in, he could just contact refineries directly and cut the bankers out. Better still, just do a deal with a miner to buy the next 600t of their output. Thinking creatively there are many ways to structure this and minimise or eliminate exposure to banks."

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Updated 29th April 2012 - Over at the Chris Martenson blog there has been some great discussion about the bullion markets, with contributions from Eric Townsend, Bron Suchecki, Victor the Cleaner and Jeff Christian. It's quality stuff and worth a read (just the comments section) in it's entirety. However relevant to my own research, I spotted this quote from Jeff, which basically vidicates Bron's theory in the paragraph above. For the comment itself, one must take Mr Christian at his word but it's so beautiful it made my eyes water. This is just one paragraph of a larger comment about silver:

"... Regarding Sprott: They got hosed. We spoke with Sprott people about their delivery problems, as well as with bankers. They handled it dreadfully, and did not require the banks to behave in standard market operating procedures. Why, we don’t know, but they did everything wrong the way many rank amateurs do. Sprott is an eminent salesman, however: He turned lemons to lemonade, saying not that he was an amateur in buying all that silver, over-paid, and was messed over in delivery. Instead, he said it was because there was a problem getting the physical silver. There was no problem with the silver; he just did not negotiate and handle the bank properly. No surprise there to anyone who has watched his funds over the years. ..."

My comments on this are: (1) Bron's interpretation appears to be correct :). (2) Sprott, however resourceful and clever, still presented a deceitful story about what occurred. If this were about a delayed BRIE delivery then I suppose it's fine but it's not - common people are searching for ways to protect their wealth from financial armageddon and many good people have been hoodwinked by Sprotts story. Perhaps at the time they bought an overpriced PSLV which later had its premium collapse. A transfer of wealth from your pocket to someone else's courtesy of hype and spin. Or as Kid Dynamite would say, 'sold to you, Sucka'.

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Addition 30th April 2012 - Kid Dynamite in the comments section added a good point, which is worth highlighting in the main article body.

"Warren - I just want to re-emphasize the point that Sprott's counterparty: ie, whomever was responsible for delivering PSLV's silver to PSLV - did NOT default on their side of the trade. this is important, as an uncareful reading of JC's explanation could conclude "just as we thought - the banks didn't give him what they owed him" which is false... "

And just remember, the primary issue is here is not whether Sprott is a great marketer (he is) or whether buying silver is good (it can be), or any kind of character judgment (irrelevant). My focus is purely that the story about the delivery taking a long time because of silver shortages, as popularly portrayed during the initial PSLV offering, is false. And consequently, whether newbie investors were influenced into a particular investment because of a false portrayal. And that it's okay to explore the human element of being duped and feeling poorly about it. Bear in mind that the PSLV 'delayed delivery' story was one of the underpinning 'shortage of silver' proofs.

Be sure to read the rest of the Martenson comments thread, which is still ongoing.