Nov 11, 2005 Shine On Charles Mackay 321gold

Shine On

Charles Mackay
The Wall Street Examiner
November 11, 2005

The Silver Users Association should not stop the new exchange traded fund for silver bullion from launching.

The Wall Street Journal and Marketwatch.Com did not see, ahem, any silver lining in the dark cloud that the SUA (Silver Users Association) cast over the SEC registration of a new silver ETF (exchange traded fund). Earlier this week, the WSJ and MW quoted a letter from the SUA to the Securities and Exchange Commission. The nonprofit silver industry group asked the SEC to stop the registration of iShares Silver Trust. The silver trust, another in a series of ETFs and bullion trusts from Barclays Global Investors, planned to own 99.9% pure silver bullion and to store it in London. The prospective symbol of the trust is SLV, and it is expected to trade on the American Stock Exchange following approval by the SEC.

Some industry analysts fear that the SUA is justified in warning of a future silver shortage - starting with the operations of the silver trust. While a shortage may indeed come to pass, the SUA has no legal standing to restrain trade in silver - or to interfere in the securities registration of SLV.

The SEC has set a precedent by previously approving a similarly structured grantor trust for gold bullion. The SEC acknowledges that these types of trusts are not regulated investment companies - and are therefore not subject to any special regulation by the SEC. SLV also believes that its operations are not subject to regulation by the CFTC (Commodity Futures Trading Commission), since they involve the purchase of bullion and not the trading of futures contracts.

While the SEC may invalidate a registration for accounting and technical problems, and still could possibly find some defects in the SLV registration, it does not appear to have the authority to halt a registration based on hypothetical future market conditions. The SEC industry classification of SLV is indistinctive. Grouped with other 'Gold and Silver Ores' companies - it has the same classification used for gold bullion trusts and precious metal mining companies.

The SEC must ignore the attempts by silver users to impede fair trade, and let the light of free markets shine on the silver ETF.

Charles Mackay
email: Charles Mackay
website: The Wall Street Examiner

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