#silversqueeze

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Maybe the Morgue finally gets crushed?

Bold is mine:
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While technicals are turning bullish for silver, Daniel Ghali, senior commodity analyst at TD Securities, said he expects fundamental factors will create a long-term uptrend for the white metal.
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“Silver markets may be set up as the most exciting trade in the energy transition theme across the entire commodities complex today,” Ghali said in his latest research note. “The energy transition is this decade's investment zeitgeist, and implications for silver are often overlooked.”
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Ghali noted that this growth in demand and significant underinvestment in mine supply has created a “universally-recognized structural deficit.” Ghali added that this fundamental imbalance has been largely ignored as markets have focused on massive above-ground stocks instead.

However, Ghali said markets have misjudged just how much silver is available, and this depleted reserve will squeeze prices higher.

“For many years, market participants could safely assume that the behemoth stockpile of above-ground silver would be sufficiently large to satisfy any reasonable scale of demand growth,” Ghali said. “Today, we believe this assumption could potentially be challenged within the next 12-24 months.”

Ghali said that industrial demand, driven by the green energy transition, has completely transformed the silver market. He noted that in 2019, there were expectations that it would take about 165 years to deplete the stockpile of silver.

Ghali said his new two-year target could be accelerated if investors jump back into the market.

“The potential ETF buying activity associated with a typical Fed cutting cycle could dramatically shorten this time span. This poses a significant liquidity risk for silver markets, and makes a legitimate case for a potential #silversqueeze on the horizon,” he said. “Pressure release valves could eventually help the missing silver make its way back to markets, but necessitate higher prices in order to do so. This is an extreme upside convexity trade that is severely underpriced.”

 
tenor.gif
 
"Green energy transition"....... Heh.... BULL SHIT,.... More like investors who are nervous as hell and don't know where to put their $$. Is that why gold is spiking too???
 
First was the Morgue
#Silversqueeze starts slow vault drain
Then China wakes up
 
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In 1 single month - February - India imported 7-8% of 2023 global production.
On an annual basis India is importing the whole 2023 global production.
That doesn't make any sense.
I have no idea where this amount of silver is coming from

India's silver imports surged by 260% in February to a record high, as lower duties encouraged large purchases from the United Arab Emirates (UAE), government and industry officials told Reuters, adding they were on track to increase by 66% this year.

Higher demand in India, the world's biggest silver consumer, could support global prices trading near their highest in three years.

India imported a record 2,295 metric tons of silver in February, up from 637 tons in January, said a government official, who declined to be named as he was not authorised to talk to the media.
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Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer, said the industry had replenished stocks in January and February after having depleted them in 2023.

"Indian imports are cyclical in nature. In one year, imports may be very high, and then the following year they may fall. Since imports fell in 2023 after record buying in 2022, we can expect imports to pick up in 2024," Thakkar said.

India's imports could rise to 6,000 tons in 2024, from last year's 3,625 tons, driven by robust demand from the fabrication and solar industries, he said.
...


That's a strong floor of demand...
 
Strong? Shoot, that's beyond exponential demand. Almost like they really are trying to put the squeeze on a certain ever-powerful market rigging cabal. Again that's 74 million ounces in one month.

India imported a record 2,295 metric tons of silver in February, up from 637 tons in January...
3,625 tons for all of 2023

Read more at:
https://economictimes.indiatimes.co...ofinterest&utm_medium=text&utm_campaign=cppst
 
Do you remember a couple of months ago Andrew Maguire reporting about European silver refineries full booked by Indian customers but unable of sourcing ingots?
 
I mean just read this Bio.

CPM Group in 1986, which was spun off from Goldman Sachs & Co and its trading arm, J. Aron & Company.

He has advised many of the world’s largest corporations and institutional investors on managing their commodities price and market exposures, as well as providing advisory services to the World Bank, United Nations, International Monetary Fund, and numerous governments.


If you choose to believe that guy then I can't help you.
 
Jeffrey says 5.5B ounces in above ground inventories. I did some quick math following Ronan Manley's template about two months ago:

16,892.81 tonnes (63%) of silver in the London vaults not owned by ETFs
173moz (4,904 tonnes) in COMEX vaults not owned by ETFs

Thats a total of 21,797 tonnes or 768,866,500 ounces without SGE/SFE (China). That's no where close to Jeffrey's claim of 5.5B. Even if we concede that ETF owned metal should be included in the totals, which I don't think is a reasonable concession, the totals two months ago were around 450 million ounces more for a grand total less than 1.3B ounces.

If you want to add Chinese metal to the total (which again is totally unreasonable as it really is not available to the west), that was about 2.1 million kg or 74,075,320 ounces. That's doesn't move the needle anywhere near 5.5B ounces.

I have no idea where Jeffrey is pulling his numbers from or what magic he is using to estimate them, but based upon what I can see and verify following Mr. Manley's template, I'm much more inclined to agree with Daniel Ghali's analysis (see OP). If the Silver Institute is right about their 690 million ounces demand estimate, that would deplete above ground stocks held in the LBMA and COMEX (and not owned by ETFs) in one to two years (not accounting for new production).
 
I think the current deficit is around 150-200 million ounces a year. So LBMA and Comex can cover that for about 4 years.
If prices stay higher than a lot of silver will come back on the market from private investors. It will also be more profitable to mine the lower grades that have been bypassed for the higher grade stuff in the last few years. I have no idea how that affects mine output overall worldwide but it should be considerable.
Still doesn't get us even close to the 5.5 b

In the end I don't know how we will ever get true price discovery though. I think the crypto market has set a precedent. You can now buy and sell a symbol that is backed by nothing and run it up to over 70k. Short sellers can also short silver down to a dollar for just a few billion dollars if they wanted to. A few billion is nothing for the government or one of the large bankers. Will they waste their time and money or let it run? Depends if the politicians are invested or not I imagine
 
I updated the vault numbers this morning and overall, the west (LBMA + COMEX) has lost roughly 12 moz of non-ETF owned silver between end of January and April 10. If that ~two month pace were to hold steady (not a fair assumption), the west's (LBMA + COMEX) silver would last ~126 months (a little over 10 years).
 
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If prices stay higher than a lot of silver will come back on the market from private investors.

By all indications, this current move up is not being driven by retail/Wall Street. This isn't a FOMO bubble yet. I actually think there is quite a bit of juice to be squeezed out of the market as retail/Wall Street buys silver at the early stages of this rally.

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It will also be more profitable to mine the lower grades that have been bypassed for the higher grade stuff in the last few years. I have no idea how that affects mine output overall worldwide but it should be considerable.

While true, from what I understand, there is a pretty significant lag in scaling up mining. It doesn't happen overnight and while the price of silver has been going up, the price of oil is also going up with the mess in the middle east, so the price of silver's effect on mining profitability might be mitigated to an extent by energy costs.

... You can now buy and sell a symbol that is backed by nothing and run it up to over 70k. ...

But that has always been true in the stock market. Stocks can go to the moon and crash to zero without any real rhyme or reason (hello Gamestop) as FOMO, momentum, or whatever drives casino bets that have nothing to do with perceptions of underlying value.
 
This guy seems to contradict with a lot of the silver bugs keep saying about supply shortages…



10 years ago the CFTC conducted an investigation about whether the US silver market was manipulated.
Jeff Christian was the main counterparty to A. Maguire and GATA
 
For yet another year and the third in a row now, silver demand massively exceeded supply in 2023. While the global market deficit fell by 30% y/y from last year’s likely all-time-high, at 184.3Moz (5,732t) it was still one of the largest figures on record. ...
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Importantly, we remain confident that such deficit conditions will remain in place for the foreseeable future. As we discuss in detail in Chapter 2, our projections for 2024 see the gap between supply and demand grow by 17% ...
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184.3moz is much higher than the 72moz I calculated in post #18. If we used 184.3moz as the deficit rate, LBMA+COMEX would only last 4.1 years. If we bump the 184.3moz by 17%, we get 215.6moz in which case, LBMA+COMEX would only last 3 and a half years.
 
...
Jeff Christian was the main counterparty to A. Maguire and GATA

It's like a Hatfield & McCoys fued...

Jeffrey Christian, managing director of metals consultancy CPM Group, today spent 16 minutes on YouTube raising and knocking down some straw men to give his viewers the misleading impression that there is nothing to be doubted about the U.S. government's involvement with the gold market.

Christian challenged long-made but usually anonymous assertions that the U.S. gold reserve at Fort Knox, Kentucky, is gone or missing in large part. He notes that there are official audits asserting that all the gold is where it should be. Those who cast doubt on the integrity of the audits, Christian says, are "scum."

But contrary to Christian's suggestion, the big question about U.S. gold reserve is not the narrow one of whether there's still metal at Fort Knox but whether the U.S. government has foreign gold obligations and whether these obligations are so large that U.S. gold reserves at Fort Knox and elsewhere are potentially impaired by multiple claims of ownership.

In this respect the curiosity of a more candid and honest analyst ...

More:


Shots fired!
 
The International Financial Services Centre Authority (IFSCA) by a recent circular enabled IFSC-based entities to supply bullion on the India International Bullion Exchange (IIBX) as ‘Qualified Suppliers IFSC’ (QS-IFSCs). This is aimed at widening the pool of suppliers and increasing participation in the bullion market.
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“At present, unless a QS-IFSC is also a bullion trading member, they can only participate in IIBX as a client through a bullion trading member. This becomes cumbersome for foreign suppliers who have non-banking operations in the IFSC. By allowing IFSC-based entities to supply bullion on the IIBX, the market can attract a wider range of suppliers and investors. This will lead to increased trading volumes and better price discovery,” said a bullion industry source.
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Gujarat’s silver imports once again touched a record high of 1,561.84 metric tonnes (MT) in the 2023-24 financial year. However, about 77% of the total silver imports — about 1,206 MT — took place from Jan to March.

Notably, this is just after the India International Bullion Exchange (IIBX) began with silver trading. ...


Gujarat is just one State within India. If I'm reading that last article correctly, they imported 23% of 2024 total silver imports in April (the fourth month of the year) - essentially maintaining the average pace set over the first three months. If the rest of India also maintained that pace, India likely imported around 1,200 tons of silver in April.
 
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Silver has a dual character, valued both for its uses as a financial asset and an industrial input, including clean-energy technologies. The metal is a key ingredient in solar panels, and with robust growth in that industry, usage of the metal is expected to reach a record this year, according to the Silver Institute. Against that backdrop, the market is headed for a fourth year in deficit, with this year’s shortage seen as the second biggest on record.

That’s led industrial users — which typically rely on miners for supply — to seek ounces by draining the world’s major inventories, according to Silver Bullion’s Gregersen. Stockpiles tracked by the London Bullion Market Association fell to the second-lowest level on record in April, while the volumes at exchanges in New York and Shanghai are near seasonal lows.

Over the next two years, the LBMA stockpiles may be depleted given the current pace of demand, according to TD Securities. The headline figure overstates the available volume of metal given that it includes exchange-traded fund holdings, Daniel Ghali, a commodity strategist, said in an April note.

“We are slowly going to see supplies tightening because industrial demand is set to go higher,” Gregersen said. “If investors are also starting to buy, then I think in two or three months’ time, my biggest problem might end up being ‘Where do I find supply?’ rather than ‘How do I sell the silver?’”

 
More interestingly to me - why do shops there sign sales contracts for inventory that they do not have in stock? It's akin to metals dealers here in the USA having months long delivery times for orders. Caveat emptor!
 
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