PSLV doesn't source their bars by standing for delivery because that would put them behind the curve in the silver market. Eric's whole business is based around being ahead of the curve. They are the by proxy warehouse. They make the deliveries. If it were the other way around, they would be the customer. The ability to deliver or take delivery provides a critical link between the derivative instrument and the commodity. Therefore, as a futures contract approaches the delivery date, the price of the futures month will gravitate toward the actual physical or cash market price.

From Sprott " Silver spot prices are the fluctuating market prices for one ounce of metal bought or sold on commodity exchanges contracted for immediate payment and delivery. The price is determined by the forward month’s futures contract with the most volume."

And it isn't because their prospectus doesn't allow it. It simply limits PSLV's assets to 10% of what is easier called anything outside of physical silver. And when it includes the clause "at the manager's discretion" it leaves the 10% sized hole wide open. In company terms, that (10%) simply just doesn't leave much room for anything else.

I'm not a PSLV hater. PSLV is great for folks that I've chatted with that live in Brazil and must fly 3.5hrs to buy (local) physical silver or someone that needs a safer place to park large amounts of money (between$26,000 to $260,000 dollars). That is the logical threshold of PSLV investment. Anyone who tells you otherwise should reread and again reread the prospectus.