Silver Demand Drivers (and vault totals)

[pmbug]

The manipulations to the paper silver market should be coming to an end shortly. CME margin raise yesterday didn't make a dent in the EFP spreads yesterday. Maybe they take effect Monday - we'll see. The short interest manipulations in China on the SFE were flagged and halted by the exchange (regulators). Meanwhile, lease rates are rising again in London signalling inventory is tight again. The physical market is about to impose it's will on the paper markets. $.02

 

[Viking]

Wholesale premiums have just jumped $2 to $3 to now $4 this morning

 

[Voodoo]

It's weird, its the big stuff that seems to be gone first. SD is out of Kilo silver bars. Apmex has a couple at like $10 over spot. Even 100 oz bars are at like $10 over spot. Meanwhile 90% can be had under spot.

Absolutely this is industrial demand, that is what I see from those numbers.

 

[Bottom Feeder]

Still, I get offered $4 under spot for my 100 Toz bar I tried to flog at our most recent coin show (yesterday).

 

[Voodoo]

Well that is a ~$14 spread on 100oz bar. At ~$90ish that is around 15%. I'd say that's ok considering the recent volatility and uncertainty, esp with the refiners.

 

[pmbug]

Monday morning in silver

Silver drifted up to ~$82 before dropping to $80 this morning. Let's look below the surface (a thread)

EFP spreads​

Current spot price: $80.01

Feb26* = +$1.06 vs -$0.41 Saturday
Mar26 = -$0.33 vs -$0.20
Apr26 = +$0.45 vs +$0.23
*data is 4 hours old

EFP Commentary​

Feb26 data isn't real time nor useful. Mar26 shifted more negative, Apr26 shifted more positive. End of Friday CME margin hike effective today. Might need to check the Feb26 EFP spread again later....

China ​

SGE $87.88 (no VAT)
SFE $93.68

SGE premium to LBMA spot ~$7

SFE 1M ozt (31.4t)

India ​

MMTC-PAMP (retail) : $93.55 (less 10% taxes = $84.19)
Feb26 [SILVERM 5kg] : $90.01 (less 7.2% taxes = ~$83.53)
Mar26 [SILVER 30kg] : $87.41

China > India > LBMA/COMEX

Big ​

SFE ($93.68)
SGE ($87.88)
Retail ($84.19)
MCX ($83.53)
spot ($80.01)
COMEX Mar26 ($79.68)

ICYMI:​

 

[Voodoo]

Woa, you glossed over the EFP spreads and kinda missed the big picture. Is that accurate? That would mean the US is in backwardation.

Ok, it looks like the most active contracts are not in backwardation.

 

[pmbug]

Feb26 data was too old to draw any meaningful conclusions/analysis.

 

[pmbug]

Checking right now... with spot @ $82.19, Marketwatch is reporting Feb26 contract 18 minutes behind now (better than 4 hours behind, but still a bit too skewed for meaningful analysis):

Futures:
Feb26 = $80.87
Mar26 = $81.52
Apr26 = $81.67

EFP spreads:
Feb26 = -$1.32
Mar26 = -$0.67
Apr26 = -$0.52

 

[68camaro]

Checking right now... with spot @ $82.19, Marketwatch is reporting Feb26 contract 18 minutes behind now (better than 4 hours behind, but still a bit too skewed for meaningful analysis):

Futures:
Feb26 = $80.87
Mar26 = $81.52
Apr26 = $81.67

EFP spreads:
Feb26 = -$1.32
Mar26 = -$0.67
Apr26 = -$0.52

They seem to be closing up further since you posted this.

 

[pmbug]

Yesterday (2-9) in silver

Silver rose from ~$80 to ~$84 during the day, fell down to ~$81 at night and has recovered to $82 this morning. Below the surface, ETFs took a day off for SuperBowl hangover (a thread)

COMEX 2-6​

311K ozt (9.7t) deposited mostly in CNT [R]

4.3M ozt (135.5t) withdrawn from Brinks (814K), CNT (1.8M), JPM (849K), Loomis (600K), MT&B (222K)

10K ozt (0.3t) moved from [E] to [R] in CNT

613K ozt (19.1t) moved from [R] to [E] in Brinks

COMEX Run Rate​

Remaining Vault Stock = 390.5M ozt (102.2M [R], 288.2M [E])
Withdraw rate through 1st week of Feb = 3.2M/day
@ 60% [R], run rate = 102.2M / 1.94M = ~53 (working) days (<3 months)

COMEX Commentary​

Withdrawals over the first week of February (15.2M ozt) were ~40% more than the average weekly rate throughout January (10.9M ozt). The COMEX garden hose is looking more like a fire hose at the moment.

CME Margins​

The CME switched from flat margins to percentage based margins not too long ago. This means that margin requirements for silver contracts scale with increases in the price of silver. Thus, the effects of the CME's recent margin hikes have amplified effects as the price of silver appreciates. Click here for charts and commentary

EFP spreads​

Current spot price: $82.02

Feb26* = -$0.43 vs ??? Yesterday (82.11 @ 4AM)
Mar26 = -$0.22 vs -$0.33 (82.03 @ 7:20AM)
Apr26 = -$0.05 vs +$0.45 (~82.08 @ 7:15AM)
*data is 3.5 hours old

EFP Commentary​

Both Marketwatch and Barchart are reporting the same stale data for the Feb26 contract lately. I guess it is the CME that not providing timely updates these days. I've calculated the EFP spreads using the spot price at each contract's time stamp.

SLV Share Lending​

10M Shares available

Borrow fee fell from 0.54% to 0.28% before settling at 0.36%

Available shares still plentiful and ready for plunder. Borrowing activity appears muted yesterday.

SLV Assets​

Blackrock: no change
JPM: no change

No activity or no reporting? Superbowl hangover day?

PSLV​

No change to units
No change to ozt
Units/ozt ratio .3413

PSLV needs 1.3M ozt (40.7t) to get back to the historical .3434 ratio.

China ​

SGE $86.73 (no VAT)
SFE $91.30

SGE premium to LBMA spot ~$5

SFE 155K ozt (4.8t)
SGE 1.4M ozt (43.2t)

SFE posts an inflow!

India ​

MMTC-PAMP (retail) : $96.11 (less 10% taxes = $86.50)
Feb26 [SILVERM 5kg] : $91.65 (less 7.2% taxes = ~$85.05)
Mar26 [SILVER 30kg] : $88.92

China > India > LBMA/COMEX

Big ​

SFE ($91.30)
SGE ($86.73)
Retail ($86.50)
MCX ($85.05)
spot ($82.02)
COMEX Mar26 ($81.81)

- 1mo lease rate 6.1%
- Feb26 EFP spread still negative
- COMEX(LBMA)
- PSLV needs 1.3M ozt

ICYMI:​

 

[pmbug]

Last week in silver (in metric tons):

SGE silver vault - 43.2
SFE silver vault - 105.2
SLV London vault - 667.7
PSLV silver vault - 23
COMEX silver stock - 473.7
LBMA silver stock - ??? (no daily or weekly data because LBMA is run by dinosaurs)

Global net change (less LBMA):
Feb 2-6 = 22.6
Jan 26-30 = 1,000.77
Jan 19-23 = 374.4
Jan 12-16 = 446.4
Jan 5-9 = 659.7
Dec 29-Jan 2 = 160.6
...

China's SGE reported another outflow for last week. I was anticipating that the SGE might have posted an inflow given:

SGE silver price premium to LBMA spot down from the ~$20 extreme highs of 2 weeks ago to ~$12 last week to ~$5 today. Falling premium would suggest that China is receiving at least some LBMA silver.
For the last two weeks, SGE (spot) price > SFE (futures) price. Today, contango has returned (SFE > SGE). This would suggest that supply is no longer extremely tight (even though that isn't what the vault stock flows are showing).

Perhaps we will see an inflow for the SGE this week (in next week's report).

PSLV posted a very unusual outflow last week - the first I've ever seen since I started watching it daily back in June of last year. Did someone actually redeem shares for physical? It looks like it.

Last week marks the 5th week in a row for the COMEX to drain profusely (~300+ tons) and the draining is accelerating (last week was ~40% higher than the average weekly drain in January). The Feb26 EFP spread was firmly negative all week, so the COMEX draining was expected as bullion banks are likely shipping COMEX silver to London.

SLV saw a massive inflow on Feb 2 and has resumed draining vault stock since. See here for more comments.

One can only imagine what chaos might be unfolding in the LBMA's London vault system right now. We can only imagine because the dinosaurs at the LBMA do not provide daily/weekly reporting of their vault stock like every other market and major fund in the world.

 

[68camaro]

Off-topic, but it would be personally fun if you did a pm video based on Space Ghost. I was a fan of the original when I was a kid; then they did a 90s? version where he had a talk show.

 

[pmbug]

If I find some footage that lends itself to an appropriate analogy, I'll do it.

 

[pmbug]

Yesterday (2-10) in silver

Silver dropped from $82 to ~$81 during the day, jumped to ~$84 at night and has risen to just under ~$86 this morning. Below the surface, silver continues flowing (a thread)

Lease rates​

1 month lease rate dropped from ~6.1% to ~2.7%. COMEX fire hose is apparently putting out the LBMA's insufficent inventory fire (for now!).

COMEX 2-9​

169K ozt (5.3t) deposited mostly in Delaware

4.3M ozt (135.7t) withdrawn from Asahi (628K), CNT (678K), JPM (2.1M), Loomis (900K), Delaware (19K)

861K ozt (26.8t) moved from [R] to [E] in JPM (372K), Loomis (106K), Malca-Amit (191K), MT&B (191K)

COMEX Run Rate​

Remaining Vault Stock = 386.3M ozt (101.4M [R], 284.8M [E])
Withdraw rate through last 5 days = 3.7M/day
@ 60% [R], run rate = 101.4M / 2.24M = ~45.2 (working) days (~2.3 months)

COMEX Commentary​

Withdrawals are maintaining a blistering pace now. The run rate for the COMEX fire hose at the current rolling weekly (last 5 days) pace is shrinking. The COMEX will run dry (of liquid free float) around April if this continues.

EFP spreads​

Current spot price: $84.38

Feb26 = -$0.81 vs -$0.43 Yesterday
Mar26 = -$0.33 vs -$0.22
Apr26 = +$0.06 vs -$0.05

EFP Commentary​

Today we get timely data for the Feb26 contract. Feb26 and Mar26 shifted more negative, Apr26 shifted positive. COMEX fire hose will continue flowing.

SLV Share Lending​

10M Shares available

Borrow fee jumped from 0.36% to 0.45% before drifting back down to 0.36% again

Available shares still plentiful and ready for plunder. Borrowing activity appears muted for 2nd day in a row.

SLV Assets​

Blackrock: 900K shares
JPM: 816K ozt (25.4t)

SLV adding stock again and lease rate down indicate COMEX silver is solving LBMA supply crisis (for now).

PSLV​

No change to units
288 ozt (just an adjustment)
Units/ozt ratio .3413

PSLV needs 1.3M ozt (40.7t) to get back to the historical .3434 ratio.

China ​

SGE $89.57 (no VAT)
SFE $94.27

SGE premium to LBMA spot ~$6

SFE 602K ozt (18.7t)

SFE posts a 2nd consecutive (and larger) inflow. Is this evidence that China is receiving LBMA silver now?

India ​

MMTC-PAMP (retail) : $98.07 (less 10% taxes = $88.26)
Feb26 [SILVERM 5kg] : $93.24 (less 7.2% taxes = ~$86.53)
Mar26 [SILVER 30kg] : $91.13

China > India > LBMA/COMEX

Big ​

SFE ($94.27)
SGE ($89.57)
Retail ($88.26)
MCX ($86.53)
spot ($84.38)
COMEX Feb26 ($83.57)

- 1mo lease rate2.7%
- Feb26 EFP spread still negative
- COMEX(LBMA)
- SLV(LBMA)
- PSLV needs 1.3M ozt

ICYMI:​

 

[pmbug]

Yesterday (2-11) in silver

Silver dropped from $85+ to ~$83 before closing at $84+ during the day, fell to ~$82 at night, climbed back to $84 and has drifted back lower to ~$82 this morning. Below the surface, COMEX+LBMA are bleeding (a thread)

Lease rates​

1 month lease stabilizing at >2.5%. LBMA silver inventory isn't fully sufficient yet (to maintain normal market function).

COMEX 2-10​

72K ozt (2.2t) deposited in Delaware

4.8M ozt (148.5t) withdrawn from Asahi (611K), CNT (368K), HSBC (110K), JPM (2.5M), Loomis (1M), et al

3.2M ozt (101.3t) moved from [R] to [E] in Asahi (942K), Brinks (414K), CNT (485K), HSBC (20K), JPM (82K), Loomis (166K), MT&B (1.1M), StoneX (46K)

COMEX Run Rate​

Remaining Vault Stock = 381.5M ozt (98.1M [R], 283.4M [E])
Withdraw rate through last 5 days = 4.0M/day
@ 60% [R], run rate = 98.1M / 2.45M = 40 (working) days (2 months)

COMEX Commentary​

Withdrawals continue to accelerate. Looks like the timetable to "Midnight" is shrinking instead of expanding.

EFP spreads​

Current spot price: $82.59

Feb26 = -$0.33 vs -$0.81 Yesterday
Mar26 = -$0.26 vs -$0.33
Apr26 = -$0.17 vs +$0.06

EFP Commentary​

All EFP spreads negative this morning. The spread between the monthly contracts is collapsing (only 7 to 9 cents between each month). The COMEX fire hose should continue flowing.

SLV Share Lending​

10M Shares available

Borrow fee rose from 0.36% to 0.39% before drifting back down to 0.37%

Available shares still plentiful and ready for plunder. Borrowing activity appears muted for 3rd day in a row.

SLV Assets​

Blackrock: 700K shares
JPM: 633K ozt (19.7t)

Second consecutive day for SLV to add shares and vault stock.

PSLV​

No change to units
No change to ozt
Units/ozt ratio .3413

PSLV needs 1.3M ozt (40.7t) to get back to the historical .3434 ratio.

China ​

SGE $88.67 (no VAT)
SFE $92.98

SGE premium to LBMA spot ~$5

SFE 242K ozt (7.5t)

SFE posts a small, but 3rd consecutive inflow for the first time since mid-December.

India ​

MMTC-PAMP (retail) : $95.00 (less 10% taxes = $85.50)
Feb26 [SILVERM 5kg] : $91.01 (less 7.2% taxes = ~$84.45)
Mar26 [SILVER 30kg] : $88.66

The premium between China and India appears to be shrinking.

Big ​

SFE ($92.98)
SGE ($88.67)
Retail ($85.50)
MCX ($84.45)
spot ($82.59)
COMEX Feb26 ($82.26)

- 1mo lease rate2.6%
- Feb26 EFP spread still negative
- COMEX(LBMA)
- SLV(LBMA)
- PSLV needs 1.3M ozt

ICYMI:​