"Taking Delivery" explained?

[timmus0382]

So how does this work? If I bought SLV shares and wish to cash them in and take delivery of physical metal what do I get? I notice that SLV is lagging behind spot so does that mean I can get bullion cheeper than buying from a coin shop? What brand coins do they hold? Will they send me ASE's or their own special generic brand? Do I get coins or bars? Is there even such a thing as taking delivery of physical metals that you claim to own via a paper statement?

[DeanStockwell]

SLV is not redeemable for bullion. I think you are talking about silver futures. Can someone else weigh in on this?

[68Camaro]

SLV is not redeemable for bullion. I think you are talking about silver futures. Can someone else weigh in on this?

My understanding is that SLV is indeed redeemable for bullion, that you can demand delivery, but it requires integer numbers of full contracts, which are 5000 oz each, or about quarter million bucks each at current rates. Not many are working at this level.

[argent_pur]

SLV can be redeemed in "baskets" of 50,000 shares, but can only be done through an "authorized participant" i.e. dealers or other financial institutions. You won't get ASE's though...you'll get 1,000 oz. door stops.

[68Camaro]

SLV can be redeemed in "baskets" of 50,000 shares, but can only be done through an "authorized participant" i.e. dealers or other financial institutions. You won't get ASE's though...you'll get 1,000 oz. door stops.

I stand corrected. Yes, it is 50,000 oz. 2.5 million bucks.

[timmus0382]

Oh now I see, so they make it unrealistic for the average person to be able to accept delivery by setting the entry so high. If it were more like 100 shares/ounces they wouldn’t be able to supply the demand and would be losing their shirt in a market like this. Plus making the delivery a door stop bar also makes it unrealistic for the average person to take delivery, one because those bars can be easily manipulated and two a thousand ounce bar is hard to trade or sell. I know I would not trade a thousand rounds for one thousand ounce bar, it’s just too risky. But I guess everything I have to say is based on the fact that I am small potatoes.

[argent_pur]

You can view the prospectus online, just google "iShares Silver Trust prospectus". For a legal document, it's actually a decent read (I guess because it's about silver )

[Lemon Thrower]

You can view the prospectus online, just google "iShares Silver Trust prospectus". For a legal document, it's actually a decent read (I guess because it's about silver )

correct. have your lawyer read the prospectus and then explain the procedure to you.

the ETF is intended as an investment vehicle to track the price of silver. its not intended to be a retail storefront. the redemption feature is a hassle and an expense to the fund and is intended to invite arbitrageurs who eliminate discounts and premiums to the value of silver.

[AGgressive Metal]

Oh now I see, so they make it unrealistic for the average person to be able to accept delivery by setting the entry so high. If it were more like 100 shares/ounces they wouldn’t be able to supply the demand and would be losing their shirt in a market like this. Plus making the delivery a door stop bar also makes it unrealistic for the average person to take delivery, one because those bars can be easily manipulated and two a thousand ounce bar is hard to trade or sell. I know I would not trade a thousand rounds for one thousand ounce bar, it’s just too risky. But I guess everything I have to say is based on the fact that I am small potatoes.

By the same token, if you were high net worth, taking delivery of 50,000 one-ouncers would not exactly be practical (and you almost certainly couldn't find that many in one place, anywhere). For financial institutions and high-net-worth people, 100 and 1,000 ounce bars are really the only way to go. A 1,000 ounce bar is "only" $48,000 or so - small potatoes in the world of high finance.

[AGgressive Metal]

IMO, one of the reasons why the ultra-rich are not hoarding silver like they do gold is the weight. 2.5 million in silver is over 4,000 pounds, and 2.5 million dollars is not that much to a billionaire. Conversely, 2.5 million in gold is only about 136 pounds and will fit in a dresser drawer.