No the arbitrages are just a whole bunch of different hedge fund's waiting to profit when SLV moves out of line with it's NAV per share.
The trust only issue new SLV shares when people bring them physical silver. They only destroy shares when people redeem their SLV for physical silver.
If I sell you 10000000 SLV shares causing the price to rise 30%, the trust fund doesn't do anything, theres no more or less silver in the vaults, theres no new SLV shares.
What will happen is some hedge fund will see that the price for SLV is way more then the physical silver backing it.
They will short SLV in the market, buy physical silver bullion, give it to the ETF trust, the trust will give them new SLV shares, and they will close out their short position. This new supply of SLV shares will drive the price down, and they will continue to do this until there are no more arbitrage opportunities- ie. SLV is trading at it's NAV.
If there was actually a shortage of physical silver, this process of 'creation' could not occur, and SLV would trade at a premium to it's NAV... But this is obviously not happening.
Their arbitrager's, theres no risk to the trade, if they couldn't lock in their exact profit and all terms they wouldn't do it (as generally they are going after fractions of a %).
