Disclaimer: EVERYTHING BELOW IS ALLEGED. THERE IS NO FAULT BY ANY OF THE ENTITIES BELOW AND THE INTERNET HAS PROVIDED CIRCUMSTANTIAL EVIDENCE OF POTENTIAL HARM TO SLV INVESTORS. NONE OF THE BELOW HAS BEEN PROVEN IN A COURT OF LAW AND EVERYONE IS PRESUMED INNOCENT UNTIL AND IF FOUND GUILTY. THIS IS FOR ENTERTAINMENT PURPOSES ONLY.
Any lawyers reading this, please bookmark this article as some of you might get a massive score of a payday from the information provided here. I needed to write the above disclaimer so I didn’t have to write allegedly 318 times in the piece.
Bottom line, upfront: it APPEARS, ALLEGEDLY, that SLV misled investors into telling them that they added over 110m oz of silver into the iShares silver trust in early February, but did not. Investors buying into SLV and buying call options on SLV expected the price of SLV to go up, but it did not. Had SLV indeed acquired the 110m oz on the open market, this cataclysmic demand would have sent the price of silver north of $50 in very short time. Instead, SLV changed their prospectus DURING this silver squeeze to suggest that not ALL of the silver is there.
Below, I will lay out the timeline and the evidence for you. The above is ALLEGED based on the evidence below. This is an important distinction, AT THIS TIME, as the evidence I’m able to find is from the internet. My suspicions are that in 6-24 months or so, entities that mislead investors will be found at fault and have to pay a fine of a few million dollars. If the entity did indeed change the prospectus DURING this event, it therefore changed the game on investors and deprived them of a much higher share price.
The weekend of Jan 30th will live in infamy in the silver bug hall of fame. Thursday the 28th and Friday the 29th saw silver prices drastically rise, starting at $24.85 on Thursday. Over the weekend, massive retail raids happened on websites worldwide, and this massive influx in retail caused all kinds of problems for these owners. Most of these websites shut down, as some sold out, but many others needed to wait until futures opened up to properly hedge – or so I understand it.
Sunday night, Jan 31st, silver gapped up $2 overnight to over $30, seeing a $5.20 move in silver in a hair just over 2 trading days.
You can then see the next day, on Tuesday Feb 2nd, silver was then smashed down $3.57. This was “tamped down” with the blessing, and perhaps the design, of the silver futures market. Below, you hear the acting CFTC chair Rostin Benham describe the “good news” of how it “could have gotten much worse” by the market being “tamped down”. To the best of my understanding, I thought the regulators are supposed to be neutral and set the rules for the “free market”. Not design a system to suppress a commodity?
With SLV, you can clearly see the strong buying and sharp move up in price on Monday, Feb 1st, with the preceding days of the 29th and 39th with strong volume.
Now, with SLV, investors at the time were led to believe that if they bought shares in SLV, that SLV would then add the appropriate ounces to the trust. So if I bought 1,000 shares of SLV, they would then buy 1,000 oz and put it in the trust by end of day. This could theoretically be done in a massive vault of a billion or so ounces like the LBMA where you have massive amounts of silver – in theory, a stroke of a computer key could then potentially associate entire pallets easily to the SLV from a float, of sorts.
The culmination of macro events at this time, then led many of us to buy SLV or SLV call options expecting the float in the LBMA warehouses to be exhausted and force SLV to go to the open spot market to buy silver at increasing prices. Potentially hundreds of millions of ounces would need to be sourced, and it led investors to believe that the price of SLV would thus go sky high. Investors of SLV are trying to play the price of silver with this vehicle, and IF investors put enough money into SLV, SLV would then have to externally source more silver to add to the vaults and thus drive prices much higher.
The contention was incredulous – that SLV added over 118m oz in 3 days???? Manly breaks down the additions…
At the EXACT same time this was going on, February 2nd it appears JP Morgan sent out an act of desperation at 4:59AM to entice people to sell or short silver. Note. Miners didn’t decline.
Changing the game
However, it appears that somewhere around February 1st, SLV changed their prospectus to suggest that “not all of the silver is there. Remember, SLV has been branded for some time as “all of the silver is there”.
Ronan Manly reported on February 7th that the suspicion was that the LBMA vaults were 85% used up, and perhaps even more.
Chris Marcus delves into the prospectus change…he mentions on FEB 3RD that SLV changed their prospectus, and sourced the Manly article above which shows the change the in the prospectus.
I wrote this LONG article at 3AM February 2nd, before the smash down of silver began. The idea was, Eric Sprott was a super genius for playing silver in the ground over the last decade since you cannot have too much silver in vaults or else you get the Hunt Brother’s treatment. About a week later, I did a Palisades Radio interview where I outlined how the end of March could signal doomsday for the COMEX and many involved. That was a serious mistake in putting a time with a prediction. In the video, I did mention how things could get in the way and delay the move to $50, but overall, the mechanics were there. The next month we saw interest rates rise mysteriously and quash the move. But the interesting point you will see is that we still should have hit $50.
The math was there. The trap was set. What happened?
Accounting error? Fraud?
I bought a TON of SLV call options for end of March. Many did. I think I was $2,000 deep in OTM calls. Had price hit $55 or so, I would have been on my way to being a millionaire. Given the information I had at my fingertips, the price should have risen. I estimated about $4b-$5b in investment would be needed to move the dial. A few weeks later, I heard Marin Katusa state $6b. Meaning, my ballpark estimation was in the zip code.
As Rick Rule goes, he would call me a butcher or candlestick maker. I’m not in the industry. I don’t have 20 years of managing a fund. But I was able to put the pieces together, do the math, understand the supply/demand, and apply this to an investment thesis.
So what went wrong?
Remember that 118m oz Ronan Manly talked about above being added? Well, it would have been added in February, right? Somebody that does accounting, would have then closed the monthly books on February in early March. In early April, when they closed the books on March, someone found a 110m oz accounting error in “one of the LBMA vaults”.
In this Ronan Manly piece, he reports on the LBMA errors.
“Instead of a 124.2 million oz increase, the increase was 18 million, a difference of a massive 106.1 million ozs. Instead of record silver holdings in London, there was no record. “
Now – as an outsider, here is my problem with the above. The article suggests that there was a record add to March stocks, and it turns out that they corrected it later to say the increase was only 18m. At issue, the silver squeeze of 110m oz being added was early February, not March. My only guess is that items were reported in for February higher, recorded in early March with reconciliation of the books. In April, that March bump up was noticed. At some point, they had to go back and make adjustments down to this number.
The problem everyone has is the 106m oz of “fake” silver added coincides greatly with the 110m oz added during silver squeeze in early February. But could these be a coincidence? The timing of this error could be off by a month? Or, or could be the same time, but reflected in March accounting documents. I don’t know.
At issue here is this isn’t a rounding error. If you had a vault of a billion ounces, you’d think being off by a few dozen ounces might happen at times. Maybe. However, at issue here is the vaults have a total of 1.2b ounces, and they were off by nearly 10%.
While that 1.2b oz is all of the LBMA, consider SLV was around 650m oz of this at the time. Here’s the holdings today at around 545m oz, or 16,978 tonnes. Much of the silver that left SLV wound up in PSLV.
That error would suggest the SLV (IF they were at fault) was off by nearly 17% in counting their stacks. If you are an SLV shareholder and THOUGHT they had all of the ounces they advertised, would you perhaps be shocked if you put all of this money into the trust for them to buy silver, and they didn’t buy any – but told you they did? IF they had then gone out and attempted to buy this, it would have forced the price up, a lot.
Here’s the overall mechanics – price of silver was $27, but a share of SLV was $25. Everyone collectively buys a ton of SLV shares, and they are supposed to go buy that metal with that money, but the ACT of buying 100m oz could have shot the price up to $35-$50 in a short period of time. Meaning, the trust was given money to buy silver during the day, but they could not source it for anywhere near the money paid to them by the end of the day.
Now, I want you to consider the “You Had One Job” memes with the accounting….
Meaning, THE primary job of a vault is to safeguard and account for your silver in this case. How could a world-renown entity allow an error of nearly 10% of all inventory? Now, to be fair, this was not the LBMA’s error – it was a member bank. They don’t say who. SLV is run by Blackrock with JPMorgan as the vaulting folks, if I got that right. So yeah, could have been 17%-20% error in SLV books? That is not a rounding error folks. THIS is the type of thing the SEC loves to look at.
Now, with accounting comes fiduciary responsibility. Meaning, financial officers then sign their names to the documents to certify that all is ok, and they put their professional name and licenses on the line when signing. Take for instance, the CFO of Blackrock at the time, Mary Cronin, signing her name to the company’s yearly 10k.
I told my buddy, the former IRS agent, last year about all of the rumors with SLV. Many in the community had suggested that all of the silver is not there or it is sold multiple times. I don’t have evidence to support those outrageous claims (lol) but I do know that he told me that there’s no way these forms get signed unless all of the metal is there and everything is above board.
June 30th this year, Mary Cronin, the former CFO of Blackrock iShares, resigned. This is the last day of the 2nd quarter. Meaning, the April adjustments would be part of this, IF this was SLV’s problem within the LBMA accounting issues.
Ronin Manly once again finds himself in the middle of the fray:
This was the announcement.
It’s hard to read so I have copied the item in blue below:
“Mr. Walker replaces Mary Cronin as the Chief Financial Officer of the Sponsor and Ms. Aguirre replaces Ms. Cronin as a Director of the Sponsor. Ms. Cronin resigned as a Director and the Chief Financial Officer of the Sponsor, effective June 30, 2021. Ms. Cronin’s decision to resign was not the result of any dispute or disagreement with the Trust on any matter relating to the Trust’s operations, policies or practices.”
One of three conclusions can be drawn from this event:
- Ms. Cronin no longer wants to work there after many years and the timing of this, on the last day of the second quarter, just happens to be a coincidence of her accepting a new career opportunity.
- Ms. Cronin didn’t feel comfortable with the situation she was placed in, and did not feel it was appropriate for her to sign documents. Leaving with an NDA and fat retirement check is a way to make this problem disappear
- Ms. Cronin wanted to take time off to spend with her family, and it just happened to be on the last day of the quarter
What conclusions to draw?
There’s a lot of smoke here, but only discovery in a court will get you the fire. The below elements of the case so far appear to support that SLV shareholders and those owning call options, have damages coming to them, at some point.
- At the end of January and early February, SLV had reported that it added 118m oz to the trust.
- Feb 3rd, the SLV prospectus was changed to reflect that “not all of the silver is there”.
- March reports showed inventory 106m oz higher than it actually was
- April LBMA finds this much higher number, but May then says it was errant.
- June 30th, SLV CFO Mary Cronin resigns after being with them for a long time
A civil lawsuit only needs a “preponderance of the evidence”, or 51% of a jury, to find for the plaintiff to win. Allegedly, SLV mislead investors to think they had added all of this silver, and they did not. Furthermore, allegedly, if they HAD gone out into the spot market to buy these 118m oz, that silver price would have moved significantly, and sharply higher. In turn, this much higher price would have attracted even more buyers and speculators – driving the price even higher.
My contention is that sometime in the next 6-24 months, the entity that the LBMA is not naming will be fined by regulators for this accounting error. Maybe a $1 million fine. Page 43 of the Wall Street Journal. You have to understand, the LBMA being off by “10%” due to a member vault is under the “you have one job” type of thing. This will not go unaccounted for. Furthermore, it would be interesting to see who signed what 2nd qtr documents for Blackrock. In looking on Yahoo Finance, I could only find yearly, 1st quarter, and 3rd quarter items. What 2nd quarter items is she supposed to have not signed?
Overall, if any of you have trading records of buying and selling SLV shares or call options at that time, I’d get those records and safeguard them for a few years down the road. When a class action suit comes out, and one will, you will need to have those records to show standing.
I won the silver squeeze. It’s just going to take me a bit longer than I wanted to hit my payday. It might be interesting to see what punitive damages that are tacked on to this, which are potentially 3x the actual damages. If anyone from SLV cares to pay me off to shut me up, I’m not above that. And yes, I am looking for a substantial payday from this which is why I invested in this in the first place.
The above case at this point is potentially circumstantial due to the LBMA not naming the identity of the organization that errored by 106m oz. Simple discovery would reveal the entity that did this, and then it would be submitted to court for evidence.