Silver Demand Drivers (and vault totals)

[pmbug]

India's MCX futures exchange (July 30) update

Silver run rate (SILVER kg contract) = 1.709M ozt (remaining vault stock) / 109K ozt/day (drain rate over the last five days) = ~16 (working) days left (~0.8 month) (from ~23d)



Gold run rate (GOLD kg contract) = 33K ozt (remaining vault stock) / 3.3K ozt/day (drain rate over the last five days) = ~10 (working) days left (~0.5 month) (from 15d)



Looking back at the withdrawal rate since July 7, it has been above 100K/day nine times out of eighteen, so 50% of the time. While the rate does (and should) fluctuate, this is sufficient to lend some confidence that the current run rate projection is likely going to be close to the mark if there isn't a significant change to the market.

Similarly, the average 5 DMA withdrawal rate for gold since July 15 (when the recent draining started) has been just over 3K/day, so the current run rate projection is likely going to be close to the mark if there isn't a significant change to the market.

The LBMA's premium over the IBJA PM fix (Indian spot price) for gold collapsed this morning to less than $4/ozt (down from $22/ozt yesterday). The IBJA PM fix for silver increased it's premium over LBMA spot slightly (back to just over $4/ozt). It looks to me like we are starting to see the tightness in MCX vault stock being reflected in India's domestic market (IBJA).

 

[pmbug]

India's MCX futures exchange (July 31) update

Silver run rate (SILVER kg contract) = 1.7M ozt (remaining vault stock) / 100K ozt/day (drain rate over the last five days) = ~17 (working) days left (~0.85 month) (from ~16d)

Gold run rate (GOLD kg contract) = 36K ozt (remaining vault stock) / 2.3K ozt/day (drain rate over the last five days) = ~16 (working) days left (~0.8 month) (from 10d)

Yesterday the MCX reports a tiny outflow for silver (5 DMA withdrawal rate shrunk just under 10%) and a surprising inflow for gold (5 DMA withdrawal rate shrunk by ~30%). That was the first net daily inflow for gold in almost 3 weeks.

It will be interesting to see what happens next week as we begin a new month (and contracts presumably roll over or not).

 

[pmbug]

India's MCX futures exchange (August 3) update

Silver run rate (SILVER kg contract) = 1.7M ozt (remaining vault stock) / 89K ozt/day (drain rate over the last five days) = ~19 (working) days left (~1 month) (from ~17d)



Gold run rate (GOLD kg contract) = 35.5K ozt (remaining vault stock) / 2.5K ozt/day (drain rate over the last five days) = ~15 (working) days left (~0.75 month) (from 16d)



MCX reports the first inflow for the SILVER kg contract since July 9 (almost a full month ago). Meanwhile, SILVER (30kg) contract discount to the SILVERM (5kg) contract fell 20% from the $1 range where it's been for a while to $0.80.

For gold, today's activity (to be reported tomorrow morning) will replace a 2.3K ozt outflow. Will we see a continuation of the large outflows to maintain the 5 DMA rate, or will the withdrawal rate shrink with a small withdrawal (or any deposit)?

 

[nickndfl]

The silver shortage narrative is beginning to surface again on YouTube.

 

[Voodoo]

Have they found a way to make more? Or did we start consuming less? No

 

[pmbug]

India's MCX futures exchange (August 4) update

Silver run rate (SILVER kg contract) = 1.7M ozt (remaining vault stock) / 25K ozt/day (drain rate over the last five days) = ~71 (working) days left (~3.55 months) (from ~19d)

Gold run rate (GOLD kg contract) = 25.5K ozt (remaining vault stock) / 4K ozt/day (drain rate over the last five days) = ~7 (working) days left (~0.35 month) (from 15d)

MCX SILVER (kg) vault stock has now posted two days in a row of inflows. Did India loosen the import restrictions? The SILVER (30kg) contract discount to the SILVERM (5kg) contract fell to $0.54 this morning - about half of the $1 range it was consistently trading until yesterday. It should start increasing again as the vault stock drain slows down or reverses.

MCX gold posted a huge outflow yesterday! MCX gold premium over LBMA spot collapsed this morning as the gold vault stock draining increases to critical levels. It doesn't make sense to me, but that's what is being reported.

 

[Voodoo]

Because the accounting is all FUBAR and obfuscated.

 

[pmbug]

India's MCX futures exchange (August 5) update

Silver run rate (SILVER kg contract) = 1.7M ozt (remaining vault stock) / 18K ozt/day (drain rate over the last five days) = ~99 (working) days left (~5 months) (from ~71d)


Gold run rate (GOLD kg contract) = 23.5K ozt (remaining vault stock) / 2.8K ozt/day (drain rate over the last five days) = ~9 (working) days left (~0.45 month) (from 7d)


MCX SILVER (kg) vault stock bleeding restarts, albeit slowly. The SILVER (30kg) contract discount to the SILVERM (5kg) contract is $0.53 as of this morning - still about half of the $1 range it was consistently trading until two days ago. It should start increasing again as the vault stock drain slows down or reverses, but that hasn't happened yet.

MCX gold posted a tiny outflow yesterday and the withdraw rate fell by ~25%. MCX gold premium over LBMA spot collapsed even further this morning as the gold vault stock drain remains at critical levels. It doesn't make sense to me, but that's what is being reported.

 

[pmbug]

India's MCX futures exchange (August 6) update

Silver run rate (SILVER kg contract) = 1.7M ozt (remaining vault stock) / 4K ozt/day DEPOSIT ("drain" rate over the last five days) =♾(working) days left (from ~99d)

Gold run rate (GOLD kg contract) = 19.4K ozt (remaining vault stock) / 2.73K ozt/day (drain rate over the last five days) = ~7 (working) days left (~0.35 month) (from 9d)

The MCX reports zero change to the SILVER (kg) vault stock for the first time since I started watching daily back on July 1. The zero activity replaced a large outflow in the 5 DMA window and the withdrawal rate flipped to a deposit rate. If zero change was reflective of ... less than correct ... reporting, I expect this will correct in the next day or two.

The premium for the SILVERM 5kg contract over the SILVER 30kg contract has shrunk to just $0.32 this morning (from the ~$1 range it traded for the last month or two). The SILVER 30kg contract is the one tied to the vault stock that I'm reporting on here - the one that is purportedly used by Indian industry. It would seem that price is reacting to low inventory.

MCX gold posted another tiny outflow yesterday and the withdraw rate shrunk insignificantly. The MCX GOLD (kg) vault stock remains critically low.

Curiously, the MCX gold discount to LBMA spot has deepened even further this morning as the gold vault stock drain remains at critical levels. It doesn't make sense to me, but that's what is being reported.

 

[CiscoKid]

Just curious, but do all these data centers going up all over the place require any silver?

 

[pmbug]

The buildings themselves? I doubt it.

The computer equipment? Probably a negligible amount would be my guess.

 

[pmbug]

 

[pmbug]

India's MCX futures exchange (August 7) update

Silver run rate (SILVER kg contract) = 1.6M ozt (remaining vault stock) / 15K ozt/day (drain rate over the last five days) = ~112(working) days left (~5.6 months) (from♾)


Gold run rate (GOLD kg contract) = 17.4K ozt (remaining vault stock) / 3.77K ozt/day (drain rate over the last five days) = ~5 (working) days left (~0.25 month) (from 7d)


Looks to me like yesterday's huge silver drain likely spanned activity from the day before (when the MCX reported zero activity). If that is not the case, the MCX had a huge one day drawdown in vault stock. We'll see if it is an anomaly or trend next week. The 5 DMA window bounces a little with these large swings in reporting, but watch it long enough and you develop an intuition about what the data means.

MCX gold posted another tiny outflow yesterday, but the last net inflow rolled out of the 5 DMA window and the withdraw rate now reflects a week's worth of outflows. The MCX GOLD (kg) vault stock remains critically low.