I noticed a while back that the silver one month (1mo) lease rate is highly correlated with the (London) vault flow of the SLV ETF. I've been tracking the data sets for a while now and as you can see in the following chart, they have mirrored each other tightly over the last couple of weeks:
SLV's London vault stock appears to have bottomed out here around the 399M ozt level. Outflows are minimal and immediately compensated with complimentary inflows. This level was last seen around November 24 when silver was $52/ozt.
The correlation between SLV's London vault flow and the 1mo lease rate indicates to me that the LBMA's free float vault stock is again a thin margin. The LBMA has been leaning heavily on SLV vault drain to satisfy demand for physical silver (presumably from China, India and @Viking ). With the SLV faucet closing, the LBMA will need more supply from other sources to keep pace.
I expect the 1mo lease rate to climb as the silver bull starts running again and SLV reverses course and resumes accumulating vault stock (putting more pressure on the LBMA).
SLV's London vault stock appears to have bottomed out here around the 399M ozt level. Outflows are minimal and immediately compensated with complimentary inflows. This level was last seen around November 24 when silver was $52/ozt.
The correlation between SLV's London vault flow and the 1mo lease rate indicates to me that the LBMA's free float vault stock is again a thin margin. The LBMA has been leaning heavily on SLV vault drain to satisfy demand for physical silver (presumably from China, India and @Viking ). With the SLV faucet closing, the LBMA will need more supply from other sources to keep pace.
I expect the 1mo lease rate to climb as the silver bull starts running again and SLV reverses course and resumes accumulating vault stock (putting more pressure on the LBMA).
