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pmbug said:
They are physical
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Is there proof of this? I'm not having a go at you Bug, I have people on the ground in China (suppliers) that tell me what's really happening; China is in the smoke and mirrors phase right now, we're in the middle of moving the three main manufacturing plants to Vietnam or even Singapore such is the implosion in China.
 
I don't live in China and have no direct, first person experience with the market. My understanding is informed by folks who do live in China (or Hong Kong).

Most recent discussion on the topic:
Eric Yeung said:
Proportion of Cash Settlement in SGE Silver Trading
Based on the structure and data from the Shanghai Gold Exchange (SGE), cash settlement constitutes less than 10% of silver contract settlements, with over 90% resulting in physical delivery. This low cash settlement ratio underscores SGE’s emphasis on physical backing, distinguishing it from more speculative, paper-heavy markets like COMEX. Below, I’ll break down the key factors, rules, and available data supporting this.
1. SGE Silver Contract Types and Settlement Rules
•SGE offers three primary silver products in its Price Matching Market (the main electronic trading venue):
◦Ag99.99 and Ag99.95: Spot physical contracts. These require full pre-trade holdings of physical silver by sellers. Settlement is physical delivery on a T+0 or T+1 basis, with the metal transferred via SGE’s vault network. Cash is exchanged only as payment for the delivered metal—no standalone cash settlement option exists.
◦Ag(T+D): Deferred delivery contract (T+N, where N is up to 3 months). This trades on margin with daily mark-to-market, but positions must ultimately settle via physical delivery unless both parties agree to a cash offset (netting opposing positions). Sellers must ensure deliverable silver in vaults; unbacked positions are prohibited.
•Overall Rule: Per SGE’s Trading Rules and Delivery Rules (as outlined in official documents and market analyses), all trades prioritize physical integrity. Cash settlement is limited to rare cases like mutual offsets or force majeure, but it’s not a default mechanism. This prevents naked shorting and ensures ~90%+ of volume ties to actual metal flow.
2. Quantitative Data on Physical vs. Cash Settlement
•Delivery Ratios: SGE reports show physical deliveries consistently exceed 90% of total contract volume for precious metals, including silver. For instance:
◦In 2023-2024, SGE’s overall precious metals delivery volume was ~4,000-5,000 tonnes annually, representing 92-95% of settled contracts (per exchange annual reports and vault data). Silver-specific figures align closely, with ~1,500-2,000 tonnes delivered yearly against total silver turnover of ~20,000-25,000 tonnes.
◦2025 Year-to-Date (through November): Preliminary data indicates ~93% physical delivery rate for silver, driven by industrial demand (e.g., PV solar paste and electronics). Cash settlements, mainly from intra-day offsets, account for the remaining ~7%.
•Turnover vs. Delivery Metrics:
•Year
•Total Silver Turnover (tonnes)
•Physical Deliveries (tonnes)
•Physical %
•Cash % (Est.)
•2023
•~22,500
•~20,800
•92%
•8%
•2024
•~24,000
•~22,300
•93%
•7%
•2025 (YTD)
•~20,500
•~19,100
•93%
•7%
•Sources: SGE vault inventories and annual summaries; estimates derived from delivery/withdrawal data, as SGE does not publish exact cash breakdowns but emphasizes physical metrics.
•Warehouse Insights: SGE’s three silver vaults hold ~3,000-4,000 tonnes on average. Weekly withdrawals (physical outflows) match ~95% of matched trades, confirming low cash reliance. In contrast, futures exchanges like SHFE (silver futures) see <5% physical delivery due to cash settlement defaults.
3. Why So Little Cash Settlement?
•Regulatory Design: Overseen by the People’s Bank of China (PBOC), SGE mandates pre-verified physical reserves for all sales, with margins (15-19% for silver) ensuring delivery feasibility. Cash offsets require exchange approval and are discouraged to maintain price discovery tied to real supply.
•Market Dynamics: China’s silver market is ~70% industrial (e.g., electronics, solar), favoring physical transfers over speculation. High delivery rates rose further in 2024-2025 amid global supply squeezes, with SGE prices often premium to Western benchmarks due to verified physical flows.
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Some past comments:


Anecdote:
 
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Just wondering Know Why? Why the 30th and not the 31st of Dec.? Its not a big deal but ??? ...... :dontknow:


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Vichris said:
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Just wondering Know Why? Why the 30th and not the 31st of Dec.? Its not a big deal but ??? ...... :dontknow:


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I wasn’t sure when markets were open/closed. As it was, daylight savings occurred after i posted and might have messed up my calc. Just wanted market closed so easy to tell.
 
KnowWhy said:
I wasn’t sure when markets were open/closed. As it was, daylight savings occurred after i posted and might have messed up my calc. Just wanted market closed so easy to tell.
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But do they close on the New Years eve? I'm not really sure when they will close for New Years. Sorry,..... not trying to be an ass about it but ????

Ok here's what I've found,....... "The stock markets will close early at 2:00 p.m. Eastern Time on December 31, 2025, in observance of New Year's Day. They will remain closed on January 1, 2026, for the holiday"....... :dontknow:


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chieftain said:
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What gives?
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pmbug

Post in thread '2025 Lunatic Fringe - Market and Trade Chat'

SGE (spot) is at an ~$8/ozt premium to LBMA spot. That is absolutely huge and should not happen in a liquid, functional market.

I would expect the LBMA member Chinese bullion banks to rape what little liquidity remains of the LBMA's silver ocean in the London OTC market.

I can't help but wonder if LBMA OTC market is already telling China that silver is T+## delivery so they should buy elsewhere. It's hard to square the premium circle otherwise. China is too hungry for immediate delivery physical silver right now as the SGE-SFE backwardation attests.

I expect we are going to see...
  • Thanks
 
Correct me if I'm wrong, but is all of this theatre indicating actual deliverable silver is close to non-existent?
 
That is correct. We are (finally) bearing witness to the scarcity in the (liquid, free float, available) physical market starting to overwhelm the paper markets. It's "getting real"
 
pmbug said:
That is correct. We are (finally) bearing witness to the scarcity in the physical market starting to overwhelm the paper markets. It's "getting real"
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Many on here (and elsewhere) had suspected there was an order of magnitude more paper silver than actual metal, however it looks as though it was a few orders of magnitudes.

GH and I had a discussion about derivatives, are they a factor here?
 
US based bullion banks went net long recently. I'd say that means they have finally conceded the point.
 
Sure. However, last October, JPM told India it would have to wait until November to receive the silver they bought in the LBMA OTC market (which is supposed to be T+1 settlement). So, it seems the rules are more suggestion than law. :dontknow:

David Jensen says LBMA is a mass of promissary note obligations many times greater than available supply (and always has been). It just takes buyers demanding delivery for the music to stop. Investors are happy to take cash. Industry needs the physical and that is what is driving the bus (although lately it seems some investors are starting to wise up).
 
pmbug said:
$78.34 at the moment on sdbullion.com with a few hours to go. @chieftain is in the driver's seat.
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The amazing thing is everyone that guessed to the top side had a piece of the action during this run even you at 88 when it briefly went above 84.....outstanding run none of the upsiders were out of the running
 
Vichris said:
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But do they close on the New Years eve? I'm not really sure when they will close for New Years. Sorry,..... not trying to be an ass about it but ????

Ok here's what I've found,....... "The stock markets will close early at 2:00 p.m. Eastern Time on December 31, 2025, in observance of New Year's Day. They will remain closed on January 1, 2026, for the holiday"....... :dontknow:


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So are we still going by 12:00 noon AK time TODAY? And if so which/who's chart is going to be the standard bearer? OR are we going by when the markets close tomorrow at 2PM eastern? OR???????????

Just looking for a little clarification here!?!?!?
 
Joe King said:
Thread OP said, no edits to above.

His thread, his rules, right?
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Right, but,.......and I agree but the markets are NOT going to close today. They wont close until 2pm eastern time TOMORROW 12/31/2025. So I'm guessing Know Why will have to watch SD Bullions chart and announce the price today 12/30/2025 at 12 noon AK time???


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Vichris said:
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Right, but,.......and I agree but the markets are NOT going to close today. They wont close until 2pm eastern time TOMORROW 12/31/2025. So I'm guessing Know Why will have to watch SD Bullions chart and announce the price today 12/30/2025 at 12 noon AK time???


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LOL...........im not going to watch it since i have no dog in this fight ........i am very glad to be out of the running due to being to low :love:(y)

early THX to KnowWhy for the fun of it all :D(y)(y)
 
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