What Is Paper Silver?

I think the short answer is it depends, for all of your questions
Are you talking about silver ETF? silver storage? options?

There are loads more people more knowledgeable and articulate than I on the matter, so I will shy away from answering and the them take this one

From what I've heard, it's a Ponzi scheme and there is no way in the world that the banks or hedge funds running the ETFs have anywhere near the amount they sell. But even so, you're "probably" alright investing in paper silver as long as you claim your share before some crisis that has everyone demanding silver all at once. I imagine that's the only way things will get dicey. Like CB said, it all depends on the amount you want to store. Is it more than you can safely store at home, perhaps in a large safe, which might cost $500 or more to install, assuming you even have the room for one? And if you're buying in quantity, ask yourself, would it be better to purchase gold, considering the amount of space a comparable block takes up? Of course, people claim the silver-gold ratio is way out whack compared to historical averages and silver has far more of an upside than gold. Then again, because there is a lot more volatility built into the silver market, some people don't have the stomach for wide its swings. Lots of questions?

tests

Actually, there is a lot of misinformation out there on this. The fact is, FDR issued executive order 6102 in April of 1933. This, illegal IMHO, move on his part was done to transfer gold from the banks, where most of the gold was at that time, to the US Treasury. They did not steal the gold, although they did force people to sell it to them whether or not they wanted to sell it. They bought it at the then going rate of $20.67 per oz. Of course, once all of the gold was collected that they thought they could get, the US dollar was devaluated by 40%. They did this by resetting the official price of gold to $35 per ounce.

As to the supposed raid on safety deposit boxes... this was ONLY done in the cases where the banks wherein the boxes were located had failed. This was a minuscule number of banks in the overall scheme of things and was not a government program to rip off ALL safety deposit boxes for gold and silver goodies. See: http://en.wikipedia.org/wiki/Executive_Order_6102

Far more recently, however, the State of California DOES have an official program for the confiscation of "abandoned property". This would be fine if the property were truly abandoned but they have carried this FAR beyond that. Initially, they considered safety deposit box property to be abandoned if the holder of the box had not contacted the bank in the past 3 years. This was then changed to 2 years and then to 1 year. They are now considering a 6 month time limit. In several cases, family heirlooms were grabbed and then sold for a small fraction of their true value, even though the box holder's name, address, and phone number were on documents inside the box. No one bothered to call or otherwise contact them before stealing their property. This is FAR more shameful behavior than anything done by FDR and is a lot more recent.

See: http://abcnews.go.com/GMA/story?id=4832471&page=1
as one example of this skullduggerous behavior. Google will show many others.

If you are buying paper silver as a long term investment with the idea of actually buying real silver, DON'T. Just buy real physical silver.

If you are buying paper silver to do some day trading on the market then go it.

Paper silver, as an investment, is for people who really do not want a lot of metal laying around, they just want an investment vehicle that (supposedly) mimics the price of silver. Most of these investors have no intention of ever receiving any metal. All they want is to make some money from moves in the price of silver. They can go long if they expect prices to rise or short if they expect prices to fall.

In some cases, people can buy silver futures that they can either trade to make a profit or hold until they can "stand for delivery" of the metal that is equal in value to the price of the futures contract at that time. This is how Gerald Celente got hammered for hundreds of thousands of dollars. He had purchased gold futures contracts when gold was around $1450 per oz. When it was in the area of $1750-1800 per ounce, he wanted to receive metal and not cash. Unfortunately for him and a lot of other MF Global investors, MFG went bust and could not make good on their promise to deliver the gold that these investors were owed. To top that off, the CME could have come in and made these investors whole from their supposed $8B insurance fund but decided not to. This is a tangled web that could take years to fully resolve. Because of this, anyone wanting physical precious metals should just buy them and not get enmeshed in the paper metal games that are being played.

One form of paper PMs that can be used by investors are the metals ETFs. Some of these are physical metals ETFs, which means that every ounce they claim to hold in the ETF is really there and is not loaned, leased, hypothecated, or re-hypothecated. It is owned by the people who hold the ETF shares and, typically, is audited on a regular basis by an independent auditor. I own some shares of a couple of these, namely, SIVR and PPLT. If I were to invest in a gold ETF, I would consider SGOL. I am not recommending these to anyone because whether or not one invests in them depends completely on their personal situation. They are working pretty well for me, though, and I consider them as longer term holdings of 6-8 years and perhaps longer.