I thought it was an interesting read and agree with the author that you ignore the activity of SLV at your own peril when trading in silver. It makes all the sense in the world that shares of SLV and physical Silver are actually two different markets but since one attempts to mimmick the other that tracking activity can actually end up leading the physical market so to speak. If the demand for SLV shares is not keeping up with the demand for physical silver then they need to sell some of their physical holdings into the market so that they can repurchase some of their shares in the open market and force the price of SLV to rise. It makes sense that their sale of silver would also (intentionally or unintentionally) adversly effect the silver market.
The interesting divergence he spoke of was a substantial drop in SLV holdings that seemed to have little effect on the rising silver market - SLV has unloaded a crap load of silver very recently that you would have expected to lower the price of silver but it seems to have not done that.
Adam seems to think that the effects on the physical market when SLV or GLD buy or sell their holdings proves that they hold real physical metal. Then he says that while silver and gold prices have moved strongly up, and while GLD accumulated a much bigger holding, SLV sold 6% of its physical because silver investors' attitude became less bullish. That sounds a little fishy to me. Here is an alternative explanation. The big silver players are just as bullish on silver as we are, and they want to accumulate physical. Suppose those big players exercised their option to withdraw physical silver from the SLV custody. That could explain why the SLV inventory decreased even as the precious metals bull is stampeding faster than before. Many of us expect that any physical silver actually held by SLV would be stripped away by the big players before the Crimex and SLV declared default on physical delivery and converted to cash settlements. This could be evidence of that process in action.
You don't need a weather man To know which way the wind blows. Bob Dylan
Do not go gentle into that good night. Rage, rage against the dying of the light. Dylan Thomas
Any fool can criticize, condemn and complain and most fools do. Benjamin Franklin
It wouldn't have to be big players taking physical from SLV's holdings, (if such holdings actually exist). It could also be that ordinary shareholders of SLV are deciding to sell their shares and buy physical.