Silver Demand Drivers (and vault totals)

[Viking]

 

[pmbug]

Yesterday (12-23) in silver

Yesterday silver spot rose above $71. Below the surface, pressure seems to be building ...

COMEX 12-22 activity​

1M ozt (33.8 tonnes) deposited in Loomis (599K) and MT&B (488K)

852K ozt (26.5 tonnes) were withdrawn from the CNT (229K), JPM (598K) and StoneX (25K ozt) vaults

1.4M ozt (43.6 tonnes) moved from registered to eligible in the Asahi vault.

EFP spread​

With a current spot price of $72.20, I'm seeing the Dec25 EFP spread negative at -$0.73 (vs -$0.62 yesterday morning)

Jan26 and Feb26 are also negative EFP spread

Mar26 EFP spread is now solidly negative at -$0.19

Commentary​

Increasingly negative EFP spreads encourage continued COMEX withdrawals (for transport to LBMA). Asahi looks to be preparing for a large withdrawal. The Dec25 contract saw an increase in deliveries yesterday. All signs point to increasing COMEX drain.

Indian MCX Futures​

Feb26 is at $77.77/ozt
Mar26 is at $77.62/ozt
$0.15/ozt backwardation vs $0.18/ozt yesterday

Looks like India is still hungry for immediate delivery silver. Is London still delivering?

China SGE/SFE​

SGE (spot) $78.49
SFE (futures) $78.02

Backwardation in China. Also, for the first time since I've been watching, the SFE futures for silver are greater than the Indian futures prices.

SLV Share Lending​

Shares available is back to 10M

Borrow fee almost tripled from 0.56% to 1.51% before settling at 1.02%

Looks like someone borrowed a lot shares yesterday.

SLV Assets​

Blackrock shed 3.4M shares
JPM shed 3M ozt (95.9 tonnes) from the vault stock

Looks like someone redeemed those borrowed shares to raid the SLV vault stock.

PSLV​

No new units added to the trust
A very rare 4.6K ozt was removed from the vault stock

I think they still need to add ~405K ozt to the vault stock per all the units added recently. Are they having trouble sourcing silver? They normally back new units within a day or two, and it's been close to a week now.

Final comments​

There is severe tightness in physical silver supplies everywhere but the COMEX (for now):

• Negative EFP spreads (LBMA tightness)
• Indian futures backwardation
• China futures backwardation and elevated price
• SLV share/vault stock raiding (LBMA tightness)
• PSLV delays in backing unit issuance
• Elevated lease rates (LBMA tightness)

 

[pmbug]

The LBMA's November vault stock report has likely overstated the LBMA's silver stock for the second month in a row.

We now have some (preliminary, but in the ball park as per last month) silver import numbers from India. If I'm reading the chart (quoted below) correctly, India imported:

~390 metric tons from the UK (London/LBMA)
~100 metric tons from China (SGE/SFE)
~90 metric tons from Switzerland (could be recast metal from UK or China)
~170 metric tons from UAE and "Other" which could also be indirectly from UK, China and/or COMEX

Total import was on the order of ~750 metric tons, which is a bit less than the 1,000 metric tons than I had anticipated based upon prior reporting. In any event, we can now do some number crunching with this import data.

The SGE/SFE drained 243 metric tons in November. If ~100 metric tons went to India, that leaves just 143 metric tons that could possibly have been sent to London (assuming none of the drain was consumed domestically or sent to the UAE, Switzerland or "other", which is not reasonable).

The vault flows for November then break down like so:

COMEX drain = 725 tonnes (possibly sent to London)
SFE/SGE (non-Indian) drain = 143 tonnes (possibly sent to London)
SLV/ETFs gain = 867 tonnes (definitely drained from London)
India gain = 390 tonnes (definitely drained from London)

Even assuming 100% of COMEX and SFE/SGE drain went to London in November (which is not reasonable), the LBMA should have reported a loss of 389 tonnes instead of a gain of 65 tonnes. The LBMA's November report appears to have overstated their silver vault stock by at least 454 tonnes which is in line with what I estimated when the report first dropped (I said ~500 tonnes which is probably closer to the truth given reasonable assumptions).

 

[pmbug]

The LBMA's November report appears to have overstated their silver vault stock by at least 1,321 tonnes!

I made a mistake in my report and the true extent of the LBMA misreporting is *much* worse than I thought.

Since I included the ETFs/SLV in the net adjustment, I should have compared it against the LBMA total stock report instead of the implied free float (which discounts the ETFs/SLV).

In other words, the LBMA should have reported a loss of 389 tonnes instead of a gain of 932 tonnes.