Tag Archives: physical silver shortage

#SilverSqueeze hits London as SLV warns of Limited Available Silver Supply

  • SilverSqueeze hits London as SLV warns of Limited Available Silver Supply
  •  14 Feb 2021 15:43
  •  Ronan Manly BullionStar

Less than a week ago in ‘Houston, we have a Problem”: 85% of Silver in London already held by ETFs’, we explained how with the emergence of the #SilverSqueeze, the silver-backed ETFs which claim to hold their silver in London, now account for 85% of all the silver claimed to be stored in the London LBMA vaults (over 28,000 tonnes of the LBMA total of 33,609 tonnes). This, for anyone who can out 2 and 2 together, does not leave very much available silver in London for silver ETFs or for anyone else, especially the largest silver ETF in the market the giant iShares Silver Trust (SLV), which let’s not forget has the infamous JP Morgan as custodian.  

That SLV has seen massive dollar inflows in late January and early February with corresponding jumps in claimed silver holdings is now widely known, but is worth repeating here, for what’s about to come next.

3,416.11 Tonnes of Silver?

The intense market interest in the iShares Silver Trust (SLV) started on 28 January when a huge volume of 152 million shares traded on NYSE Arca. Again on Friday 29 January, SLV traded a massive volume of 113 million shares. This led to an increase in SLV ‘Shares Outstanding’ on Friday 29 January of 37 million shares, and a same day claim by JP Morgan, the SLV custodian, that it had increased the silver held in the SLV by 37.67 million ozs (1,171 tonnes), all claimed to be sourced in the LBMA vaults in London.

On Monday 01 February, an even larger 280 million SLV shares traded on NYSE, and by end of day SLV shares outstanding jumped by 20 million. On that day SLV claimed to add another 15.376 million ounces of silver (478.25 tonnes) within the LBMA vaults in London, about three-quarters of the value of the new SLV shares created on that day.

On Tuesday 2 February, with SLV trading still elevated on NYSE, the iShares Silver Trust created a massive 61,350,000 new SLV shares, bringing the SLV shares outstanding to 729.1 million. On the same day, JP Morgan and Blackrock claimed to have added a huge 56.783 million ozs of silver (1,766 tonnes) to the SLV (again all in London), an incredible amount by any measure, but still short of reflecting the total of 118.45 million total of new shares that had been created between Friday and Tuesday (which led them to adjust down shares outstanding by 8.6 million on Wednesday 3 February).

Over this time, you can see a nearly one for one relationship between the change in number of SLV shares outstanding and the amount of silver ounces claimed to be added to SLV.

Between Friday 29 January and Wednesday 3 February inclusive, SLV shares outstanding increased by a net 109.85 million. Over the 3-day period from Friday 29 January to Tuesday 2 February, SLV claimed to have added an incredible 109.83 million ozs of silver (3,416.11 tonnes), with holdings of silver bars rising from 567.52 million ozs of silver to 677.35 million ounces (from 17,651.77 tonnes to 21,067.88 tonnes).

Thin on the ground – Some of the coveted 1000 oz silver bars

According to the SLV daily bar lists, this extra 3,416.11 tonnes of silver added to SLV between 29 January and 2 February was in the form of 113,501 Good Delivery silver bars (the bars weighing approx. 1000 oz each). Again, according to the SLV bar list, these bars were added in five London vaults which SLV uses, namely Brinks vault in Premier Park London (45.5%), Loomis London vault (27.7%), Brinks Unit 7 vault Radius Park London (15.5%), Malca Amit London vault (6.0%) and JP Morgan’s own London vault (a measly 5.3%).

Read Liberty Banned! Even Grandma’s In The Street Yelling “Liberty or Death”

In fact, according to the bar lists, SLV only started tapping into silver in the Brinks Premier park vault on Monday 1 February, and only started tapping to silver held in the Loomis London vault on Tuesday 2 February. Which to some people may look like a case of desperation or maybe even panic.

SLV silver holdings over the 6 months from August 2020 to February 2021. Source: www.GoldChartsRUs.com

Unable to Acquire Sufficient Silver

Adding 3,416.11 tonnes of silver to SLV between 29 January and 2 February is not something that JP Morgan can easily claim to do again.

Which is why it’s particularly interesting that on Wednesday 3 February, right after claiming to add 3416 tonnes of silver to SLV by frantically tapping the LBMA vaults in London, the iShares Silver Trust prospectus was changed, and the following wording added:

The demand for silver may temporarily exceed available supply that is acceptable for delivery to the Trust, which may adversely affect an investment in the Shares.

To the extent that demand for silver exceeds the available supply at that time, Authorized Participants may not be able to readily acquire sufficient amounts of silver necessary for the creation of a Basket.

Baskets may be created only by Authorized Participants, and are only issued in exchange for an amount of silver determined by the Trustee that meets the specifications described below under “Description of the Shares and the Trust Agreement— Deposit of Silver; Issuance of Baskets” on each day that NYSE Arca is open for regular trading. Market speculation in silver could result in increased requests for the issuance of Baskets.

It is possible that Authorized Participants may be unable to acquire sufficient silver that is acceptable for delivery to the Trust for the issuance of new Baskets due to a limited then-available supply coupled with a surge in demand for the Shares.

In such circumstances, the Trust may suspend or restrict the issuance of Baskets. Such occurrence may lead to further volatility in Share price and deviations, which may be significant, in the market price of the Shares relative to the NAV.”

That the prospectus change was first drafted on Wednesday 3 February is clear by looking at prospectus pdf filename which is ‘p-ishares-silver-trust-prospectus-3-feb.pdf’ and the pdf title ‘Microsoft Word – slv20210203_s3asr_v1.docx’, which was authored by someone called ‘nick’. While the draft started in Word, the final version was saved as a pdf on 5 February.

SLV Prospectus amendment draft created on Wednesday 3 February, 2021

The final pdf date is the same day, 5 February, that the amended prospectus was quietly uploaded to the SEC Edgar website here with an effective date of 8 February. The previous version of the SLV prospectus was from 14 January

SLV informs SEC of its amended prospectus, 5 February 2021

Below you can see the changes in the new 8 February version of the SLV prospectus compared to the 14 January version.

#SilverSqueeze
SLV Prospectus” Left Hand Side – 14 January version, Right Hand Side New February version

BullionStar picked up on the fact that there was a new prospectus with the suspicious 3 February date, and then a twitter user (h/t Roelzns) compared the two prospectus versions to pinpoint the amended

#SilverSqueeze

Silver Shortage

In addition to the paragraph above about silver demand exceeding available silver supply, the SLV prospectus also added into two further paragraghs under the first, one of which ominously predicting volatile share price movements that could be uncorrelated to the silver price: 

Risks Related to the Shares

A sudden increase in demand for Shares that temporarily exceeds supply may result in price volatility of the Shares.

A significant change in the sentiment of investors towards silver may occur. Investors may purchase Shares to speculate on the price of silver or to hedge existing silver exposure. Speculation on the price of silver may involve long and short exposures. To the extent that the aggregate short exposure exceeds the number of Shares available for purchase, investors with short exposure may have to pay a premium to repurchase Shares for delivery to Share lenders.

In turn, those repurchases may dramatically increase the price of the Shares until additional Shares are issued through the creation process. This could lead to volatile price movements in Shares that are not directly correlated to the price of silver.

Humorously, the third new paragraph inserted into the SLV prospectus explains that the silver price, which don’t forget is a paper price set by the dominance of bullion bank trading on COMEX and LBMA London, is subject to extreme fluctuations which are unrelated to physical silver demand and supply, but alas there is no mention of the years long silver price manipulations that JP Morgan and other LBMA cronies have been recently prosecuted for:   

“The trading price of the Shares has recently been, and could potentially continue to be, volatile.

The trading price of the Shares has been highly volatile and could continue to be subject to wide fluctuations in response to various factors. The silver market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to factors such as silver’s uses in jewelry, technology, and industrial applications, or cost and production levels in major silver-producing countries such as China, Mexico, and Peru. In particular, supply chain disruptions resulting from the COVID-19 outbreak and investor speculation have significantly contributed to recent price and volume fluctuations.”

If the short squeeze on GameStop caused fireworks among a few hedge funds on Wall Street, we hate to think what a short squeeze on the global silver supply will look like as hedge funds wake up to the possibility that SLV “cannot acquire sufficient silver acceptable for delivery to the Trust”.

SLV Won’t Break The Bullion Banks… But They Can Be Broken

We have identified a critical weakness in the bullion industry

The silver market is incredibly weak right now and reading through an article from Bullion Star really made me reflect on some of the structural weaknesses of the silver market. The silver supply is always the strongest fundamental reason to own silver. The bullion banks could be easily punished but it won’t be through SLV but buying physical silver. The paper market and the physical market are worlds apart hence the huge premiums on Silver Eagles and notices from big bullion dealers. If you want to crush the bullion banks buy physical silver.

Even the suggestion of a short squeeze on SLV sent everything connected to silver rising in anticipation and the move was huge despite some people’s suggestion that silver jumping nearly $3 at open is normal. That takes an enormous fortune to move SLV. We need to learn from what happened in regards to the physical silver market bullion dealers went from limited supply to no supply. If you want to expose the fraud and manipulation you need to expose the fact there is no silver to back up the paper market. As we’ve seen this could be accomplished with ease.

{The silver short squeeze in physical silver at present is unprecedented. Even so, the spot price of paper silver is not even close to the real physical equilibrium price of silver.  BullionStar may soon have no option but to abandon setting prices based on silver spot price altogether and move to fixed prices.

Thanks to  r/WallStreetBets (WSB) and related spin offs, the wider public is starting to open its eyes to the corruption and cronyism in the financial markets including in the paper gold and paper silver markets.

For years, BullionStar has been one of the strongest critics of the manipulated precious metals markets where paper issuance of silver (out of thin air) exceeds the physical availability of real silver at a multiple of at least 100 to 1.

While some in the WSB movement have suggested purchases of SLV shares and call options, many others are recommending physical silver. It’s important to understand that purchases of SLV shares does not equate to putting pressure on bullion banks. Bullion banks provide various services to ETF’s, such as custodial services, and ETF’s are known for colluding with central banks. The only way to put pressure on the corrupted paper silver market and on the bullion banks is to buy physical silver. Only then is there a chance that price discovery for real physical silver will shift to be based on the actual trading of physical silver instead of being inherited from synthetic paper trading prone to manipulation.}

To break the paper silver market requires exactly what we saw, people buying physical silver. With 60% of the worlds production shut down for months last year to maniac central bankers printing money until the dollar dies silver is looking better and better.

This Is Insane! Apex Overwhelmed With Record Silver Demand And Makes Statement On Physical Silver Shortage

This is Just insane The largest Bullion dealers are running low, they talk about fighting over the last scraps in the marketplace and soaring premiums moving forward. The Excitement stirred up into silver by Wall Street Bets is enough to strip the shelves and it’s strange to see the Silver Bull market might be what actually ends some of these bullion companies because it seems there is just no silver supply available and there is no room for any increase in demand for physical silver

APMEX Statement On Current Market Conditions:

Sold Out 12X Demand

In the last week, we have seen a dramatic shift in Silver demand from our customers. For example, the ratio of ounces sold per day was running about two times earlier in the week and closer to four times the average demand by the end of the week. Once markets closed on Friday, we saw demand hit as much as six times a typical business day and more than 12 times a normal weekend day. Combined with the extremely high demand levels, we are also seeing a surge in new customers. On Saturday alone, we added as many new customers as we usually add in a week.

Any Precious Metal dealer will take a long position in the futures market to protect against spot price exposure when the markets open. We do this because it is our goal not to take a speculative position on metal. The weekends are unique as we are not able to real-time hedge our position. We took an aggressive position this weekend, but clearly could not have predicted the volumes that were seen. We have partnerships around to world that allowed us to cover these long positions, but only to a point. Once we exceeded our comfort levels, we had little choice but to stop the sale of Silver on our website. This was a difficult decision to make and unprecedented in our history.

As we evaluate the markets, it is difficult to know where Silver’s price and demand will go in the coming day and weeks. APMEX is highly capitalized and has more than $150 million in inventory to support demand. We have made strategic decisions to procure additional metal, locking up any metal we can find in the market place. We suspect premiums will rise and rise quickly, as we are seeing significant increases in our costs, when we can even locate the metal. It is also highly likely that we will need an additional day or two to fill orders based on current order counts. The one guarantee we can make to our customers is that you will only be sold metal that is on-site, or we have procured the metal with a firm commitment date from our partners. In markets like this, we feel this is the best approach a retailer can take, as no one can predict product availability.

We want to thank our customers for their patience and understanding during these turbulent times. APMEX prides itself on best in class service and delivering on promises to our customers.

Regards,

Ken Lewis
CEO, APMEX\

“Everyone Is Afraid Ahead Of The Open” – Reddit-Raiders Spark Nationwide Physical Silver Shortage

Silver Orders Halted After 10X Surge In Silver Orders, The Worlds Biggest Short Squeeze

BY TYLER DURDEN

For some background on just how unprecedented this weekend’s action in silver markets is, Tyler Wall, the CEO of SD Bullion writes the following (emphasis ours):

In the 24 hours proceeding Friday market close, SD Bullion sold nearly 10x the number of silver ounces that we normally would sell in an entire weekend leading to Sunday market open.

In a normal market, we normally can find at least one supplier/source willing to sell some ounces over the weekend if we exceed our long position (the number of ounces we predict we will sell over the weekend).

However, everyone we talk to is afraid of a gap up at Sunday night market open.

This is about ready to get really interesting as there was very little inventory left from suppliers/mints going into Friday close.

Our direct AP supplier informed us after close on Friday that the “US Mint will be on allocation for the remainder of Type 1” (Current Silver Eagle Design).

Our sales for the month of January exceeded any one month last year during the heart of the pandemic. It was an all-time record month in our company history. 

And, perhaps most importantly, as QTR tweets so succinctly, “this is a red pill moment for many, and it’s beautiful.”

The thing is that no matter what happens with #SilverSqueeze, a lot of younger people are for the first time informing themselves that metals are the only true real money. That realization sticks for life, even when squeezes end. This is a red pill moment for many & its beautiful— Quoth the Raven (@QTRResearch) January 31, 2021

Additionally, there are also signs of a notable regime shift, as Bloomberg points out, investors are holding onto silver they own, rather than trying to take profits.

“Now we’re seeing nothing, no single offer, which is scary,” Peter Thomas, senior vice president at Zaner Group, said by phone from Chicago.

“Whatever we sell, people are holding it. There’s no inflow of metal at all.”

*  *  *

Update (1030ET): It would appear the run on silver has begun. With the market closed, traders have rushed to secure some exposure to silver ahead of what WSB suggests could be “the world’s biggest short squeeze” and that has left bullion dealers 

As we noted below, the premium for physical silver had soared late Friday and into Saturday (after the massive flows into SLV), but as Sunday rolled around, bullion dealers are now facing massive shortages of physical coins.

Source: APMEX

Source: JMBullion

Source: SDBullion

And as one investor noted, the shortages are widespread…

We can only imagine where SLV will open after this.

*  *  *

While all eyes have been focused on GameStop and a handful of other heavily-shorted stocks as they exploded higher under continuous fire from WallStreetBets traders igniting a short-squeeze coinciding with a gamma-squeeze, the last few days saw another asset suddenly get in the crosshairs of the ‘Reddit-Raiders’ – Silver.

On Thursday, we asked “Is The Reddit Rebellion About To Descend On The Precious Metals Market?” … One WallStreetBets user (jjalj30) posted the following last night:

Silver Bullion Market is one of the most manipulated on earth. Any short squeeze in silver paper shorts would be EPIC. We know billion banks are manipulating gold and silver to cover real inflation.

Both the industrial case and monetary case, debt printing has never been more favorable for the No. 1 inflation hedge Silver.

Inflation adjusted Silver should be at 1000$ instead of 25$. Link to post removed by mods.

Why not squeeze $SLV to real physical price.

Think about the Gainz. If you don’t care about the gains, think about the banks like JP MORGAN you’d be destroying along the way….

Tldr- Corner the market. GV thinks its possible to squeeze $SLV, FUCK AFTER SEEING $AG AND $GME EVEN I THINK WE CAN DO IT. BUY $SLV GO ALL IN TH GAINZ WILL BE UNLIMITED. DEMAND PHYSICAL IF YOU CAN. FUCK THE BANKS.

Disclaimer: This is not Financial advice. I am not a financial services professional. This is my personal opinion and speculation as an uneducated and uninformed person.

…and judging by the unprecedented flows into the Silver ETF (SLV) they just got started…

SLV saw inflows of almost one billion dollars on Friday, almost double the previous record inflow for this 15 year-old ETF.

Source: Bloomberg

Which helped prompt a spike in SLV off Wednesday’s lows of over 11% (and note that every surge in price was mimicked by gold, but gold was instantly monkey-hammered lower after the spike).

Source: Bloomberg

And judging by the asset flow, SLV has room to run here…

Source: Bloomberg

Just as short-interest in the ETF has been building…

Source: Bloomberg

This surge came after Reddit user ‘TheHappyHawaiian’ posted the following thesis on buying silver noting that “the worlds biggest short squeeze is possible and we can make history.”

However, judging by the massive physical premiums for silver we are seeing this weekend at APMEX

… JM Bullion

… and SD Bullion.

…there are more than a few who are already rotating to SLV from GME.