A weekly thread to discuss financial matters - from personal all the way up to global.
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Notes -
I've been slowly building a position in SLV since September. Up to 86 shares. That's +86 delta, but my total position's net delta is 226 when counting the short puts. That means at this exact price level, my position simulates the ownership of 226 shares of SLV. I also own a very small position in GLD.
Smart people online have told me that an oil crisis and a strong dollar work against precious metals, and I believe they're right. But looking through that, I believe Fed independence is on borrowed time, the only way out of the US debt crisis is with money printing and engineered inflation, and I think the "debasement" trade that was on at the turn of this year will resume in fits and starts as the US overplays its leverage as the controller of the most popular reserve currency.
This may not even come to pass within the next decade or so, which would make me early, which would make me wrong. So I'm trying not to get too crazy with the position sizing.
How does the price of SLV and the NAV of SLV correlate to the spot price of physical silver? Reading the prospectus, it seems like it is actually holding a fair amount of physical silver in trust, but I'm out traveling for the weekend and I can't really dig.
It's supposed to exactly track spot silver. SLV is a trust that owns actual silver sitting in an actual vault in London. When they need to pay the trust's expenses, they have to sell some of the silver to do so. As a result the amount of silver your share represents will slowly erode over time. GLD works the same way. When it was issued, it was pegged to 1/10th of an ounce of gold but now trades well below that.
SLV is the easiest way to build a silver position that I know of, and it's very liquid. For me its relatively high expense ratio is the price to pay for its very liquid options. I believe there are cheaper silver ETFs out there if all you want to do is buy shares.
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