One trend in the precious metals markets which has yet to get widespread coverage but deserves more attention is the plummeting inventories of physical silver in the London vaults of the London Bullion Market Association (LBMA). These comprise vaults in and around London run by the bullion banks JP Morgan, HSBC and ICBC Standard Bank, as well as the London vaults of three security operators, Brinks, Malca-Amit and Loomis. London sub-Billion Market Association. Haemorrhaging Quietly, and almost under the radar, the quantity of silver held in the LBMA vaults has been consistently haemorrhaging for 7 straight months now. Latest data from the LBMA as of the end of June 2022 shows that the LBMA vaults now hold only 997.4 million ozs of silver (31,023 tonnes). Compared to the end of June 2021 when LBMA silver inventories stood at 1.18 billion ozs (36,706 tonnes), the LBMA vaults’ June 2022 month-end silver inventories are now 182.7 million ozs (5,683 tonnes) lower than a year ago, in other words a whopping 15.48% lower compared to June 2021. Notably, most of this freefall in London silver holdings has occurred since the end of November 2021, with LBMA silver inventories having consistently fallen each and every month since then. From the end of November 2021 when the LBMA London vaults reported holding 1.17 million ozs of silver (36,422 tonnes), silver inventories have fallen by a cumulative 173.5 million ozs (5,398 tonnes). That’s a 14.82% drop over 7 months from end of November 2021 to the end of June 2022. In addition, these June 2022 LBMA silver holdings are the lowest LBMA silver inventories since December 2016 and the first time since November 2016 that the LBMA silver inventories have fallen below 1 billion ozs. Over the exactly 6 year period since monthly LBMA silver inventory data was first published in July 2016, there has never before been a 7 month period (nor a 6 month period) in which the LBMA silver holdings fell consistently each and every month. The only partially comparable time period across the data series was when LBMA silver holdings fell consistently in each of 5 months between April and August 2020, and that was during the LBMA – COMEX (Exchange for Physical (EFP)) crisis when the LBMA bullion banks in panic mode were forced to transport huge amounts of silver (and gold) bars from the LBMA London vaults to the COMEX vaults in New York to meet the delivery requirements on futures contracts so as to prevent gold and silver prices moving into real price discovery mode. Over that 5 month period between April and August 2020, the LBMA silver inventories dropped by 102.2 million ozs (i.e. a drop of 8.7%). But to put it into context, the current haemorrhaging of silver from London of 182.7 million ozs that has been ongoing since June 2021 is now approaching a figure that is twice as large as the April – August 2020 LBMA silver vault outflows from London. Lack of Underpinning
On its website, the LBMA disingenuously claims that the silver (and gold) held in its London vaults “provide an important insight into London’s ability to underpin the physical OTC market.” What the LBMA doesn’t say however, is that of the 31,023 tonnes of silver that it claims was held in the LBMA London vault warehouses at the end of June 2022, a massive 19,422 tonnes, or 62.6% of this total, represented silver held in the LBMA London vaults that was owned by Exchange Traded Funds (ETFs) such as the iShares Silver Trust (SLV), the Wisdomtree Physical Silver ETC (PHAG), and the Aberdeen (abrdn) Physical Silver Shares ETF (SIVR).
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