A reader of Ed Steer's Gold and Silver Daily asked a great question:
"When you have time, please explain in detail how "authorized participants are shorting SLV shares in lieu of depositing the metal." I do not understand how selling something you do not have makes up for silver that is supposed to be deposited."
Ted Butler provides the clear answer:
"SLV and GLD are exceptionally unique securities in that they are open-ended trusts that promise to be backed by set amounts of silver and gold metal for each share created or outstanding. Further, they are unique in that shares can be converted into metal for redemption when done in basket amounts and by authorized participants (APs). ...