Time to test some claims again. Todays spotlight of scrutiny turns to SLV, the world’s largest stockpile of physical silver. For those of you looking for conspiracy, you will NOT find it here. What you will find, is analysis and questions of CLAIMS being made. The people running the trust CLAIM they have 366 million ounces of silver. Others CLAIM they don’t. Who is correct? And darn it, there’s money to be had depending on who is right or wrong.
Following GM Jenkins fine example of putting a chart to opinion, here is an anecdotal chart drawn from information available in the blogosphere. Note that each party has their own line of reasoning backing their stance (if I have unfairly presented anyone here, let me know):
First, why does it matter? Well first up – it’s a very big pile of silver. If the real silver is there as CLAIMED by the iShares Silver Trust, then most of the other stories we’ve been hearing don’t make sense. After all, it’s a simple case of whoever wants physical silver just buys a bunch of SLV shares and redeems them at spot price. No premium-laced cash settlements necessary. No 22% NAV premium required. No tightness of physical market. No delivery problems.
Now, I could write a book (or a very good action movie) about all the various counter claims – unless living under a rock then you are familiar with them already, and therefore I won’t discuss them in depth. Instead I want to focus on doing some hard concrete objective analysis. I also want to expose the methods for my research, to demonstrate that I’m not making any conjecture. Then I want to go to the extra step of making this accessible.
Here’s the gambit:
- SLV publish their bar serial numbers in a new PDF every week. Very transparent.
- There’s a lot of (public) information there, but it’s difficult to study because of the format.
- Let’s collate this information so that we can analyse it better (a relational database).
- Let’s put the database online and open it to the public so that anyone can access the info.
- Let’s graph this data and slice and dice it.
I’ll be working on the premise that good forgery is very difficult to do consistently – particularly with large amounts of data. I have no way of telling whether some interns have a full time job fabricating data records to make it look real – we can only look at the data presented to us and see if any anomalies exist.
I need to advise that some earlier studies have been done on the same. I currently am aware of at least two:
- The excellent weekly analysis of the Silver ETF bar numbers, here. We are very appreciative of the folk at http://About.Ag/ as they shared a bunch of data with us. You should check out their site for a very detailed and comprehensive analysis of all things related to silver.
- The Project Mayhem July 2009 investigation, who tried very hard to conjure a duplicates bogeyman, but has since been really well dissected by Bron Suchecki here.
Given that some analysis already exists out there, my strategy is slightly different and there are 4 phases to this project:
- (DONE) Construct a database and make it publicly accessible (using SQL Azure).
- Make a general call out there for all historical silver bar serial number files that people might have – both from SLV and other funds.
- Some kind of website component that people can put on their website to do an easy bar serial lookup (e.g. an investor could verify that a bar they received from SLV was actually held in their stock).
- Over time, with enough data it might be possible to cross-reference data from various funds and check for any multiple claims on the same metal.
The most important element of this is that it’s all independently verifiable. What is there is merely a copy of what was previously publicly available. If you have TSQL skills, or you can hire a data monkey who does then you can easily check and double check the claims that I make about the claims. There’s nothing to hide here, you can test everything yourself. If you don’t have access to your own data monkey then I can help (in exchange for some benny bucks).
Database Server: erwzbgqjg0.database.windows.net
Database Name: BullionBars
User Name: slvreadonly
If you have access to some OLD serial bar lists which you may have downloaded in the past and would like these to be added to the analysis data, please get in contact me at this blog, we would love to have a larger data picture.
If you have some ideas for some charts and graphs, requests changes and ideas: Submit Ideas Here
Disclaimer: I don’t accept any responsibility for the accuracy of the data however it is easily verifiable from visiting the source of the original documents (listed in the database). I may change the database schema and data at any time and I may revoke access to the public login if I desire. Making the database public is NOT an acceptance that the SLV bars are real. Do not make any trades based on the information I present, however please feel free to use the information as part of your own due diligence.
Currently I have loaded data from mid-March 2011 to present, with more historical data to come (I am in possession of files from July 2010 onwards). I’ve done a little bit of analysis so far. Here is a quick profile of bar weight distribution. Dead boring – there is nothing to see here except that the shape is pretty close to what you would expect and is the classic distribution of bar size.
Then something more interesting, here is a chart of inventory by ‘country of origin’ for the refiner who produced the bars. This graph goes not currently show movement in-and-out (or movement over time), but one thing is clear – it has lots of silver from Russia and China. Again this only proves that SLV claims to have lots of silver which originates from refiners in Russia and China. Someone might be able to call the significance on that – I don’t have enough knowledge to make a judgement. Note these don’t necessary represent new bars being made, just a representation of what SLV claims to hold @ April 27.
Wading through all the data has been quite an exercise – there are a lot of records. On the surface it looks quite real to me, and the idea about JPM being long physical silver looks real when you stop to think about it. Personally we have to come up with a better theory … for example let’s say they do have the silver but can’t release it because it forms the collateral for all their leveraged paper trading then that also makes sense of what we’re seeing, and the real value for that underlying silver is worth more to them, than an 80% premium, i.e. perhaps everyone is right but for the wrong reasons. The key to this whole thing appears to be ‘derivatives’ and I’m trying to find the right interpretation of it. Discussion is encouraged and I’ll be adding extra dimensions to my analysis and database over time, but I would really welcome some notes from Amber/Wynter_Benton if you’re out there. And Kid Dynamite, just so you know – my database does not PROVE the silver is there – it simply makes the existing CLAIMS more accessible for analysis (to everyone). Paul D. Bain, I’m interested in some of your theories too if you had a comment (you owe me one).