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Record Silver ETF Inflow in London | Gold +$2,222 oz Intra-Week

Summary

  • A record inflow of over 29 million ounces of silver went into a large unsecured silver ETF in London.
  • This inflow happened in the Loco London vault system, likely a private transaction.
  • Silver demand in China remains strong, with a projected tripling of solar capacity by 2033.
  • The inflow suggests potential silver supply shortages in the coming years.
  • Gold is also seeing renewed interest, with inflows into unsecured gold ETFs.
  • A coming secular bear market in long-term government bonds could benefit gold.
  • Central banks have been accumulating gold in recent years, anticipating a weaker US dollar.
  • The gold price chart suggests a potential bull run for gold in the future.
  • Silver's price action suggests a potential breakout to higher prices in the coming years.
  • Investors are increasingly looking at gold and silver as alternatives to the stock market.

On the heels of last month's record size silver import volume into India of over 70 million ounces for February 2024 alone.

This week we saw record sized capital inflows into one of the world's largest unsecured Silver ETFs with an alleged 1,000 oz bar stored in London. An approximate three-quarters of a billion fiat dollar inflow. Or more succinctly an additional over 29 million ounce inflow into $SIVR silver ETF.

This physical inflow occurred in the Loco London vault system, and thus the trading was private between parties, possibly not even affecting silver spot price markets.

Let's put this reported over 903 metric ton inflow of 1,000 oz silver bars into size perspective shall we.

What you see here are 15 metric tons of silver piled on wooden crates.

The alleged physical flow into SIVR over the last two weeks amounts to more than 60 times this amount.

Another way to put this few week movement into perspective is comparing it to the relatively tiny US Mint American Silver Eagle bullion coin market.

The US Mint has not produced nor sold over 29 million ounces of their flagship silver bullion product since Covid 2020.

Hopefully that give you perspective of why we're leading this week's bullion market update with that breaking data.

In a world that seems hell bent on using up all available fine silver inventories thanks to continually large demand outstripping new line supply deficits. Some combined over 100 million ounce record-sized physical silver flows occurring over the last weeks and months will likely help that 2024 forecast come in understated.

As China continues paying international silver spot prices plus a local +8% premium for industrial sized 1,000 oz silver bullion bars.

Reports continue being published that China's silver solar demand is going to stay robust through 2033. As a projecting tripling of their already world leading solar capacity remains a commonly cited forecast.

On the unsecured Gold ETF fund flow side of the western world equation. We have finally begun seeing some capital inflows that nearly match levels last seen at the quieting down of the last near US bank crisis during late winter early spring last year.

Apparently gold popping intra-week to $2,222 oz in fiat US dollars is attracting momentum capital inflows into the unsecured western gold ETF complex.

Yet I still don't think the market has fully realized yet that it is staring straight down the barrel of a potential decades coming secular bear market in long term government bonds.

The chart on the left measures long term bonds versus gold starting at parity a year before Covid March 2019. Any wonder why government central banks have been collectively buying gold bullion often over bonds in record size the last two years?

But wait, you might wonder staring at the chart on the right hand side.

What is up with all the red net central bank gold bullion reserve sale bars during the 1990s into the 2000s?

Well, here is a trip down hubris memory lane.

You might have heard about the United Kingdom's Gordon Brown's bottom, when the then former empire sold about 1/2 its official gold reserves at some of the lowest gold prices on record over the last 45 years. Proper.

Stare longer at this chart, and you'll likely laugh at so called safe haven Switzerland selling well over 1,000 metric tonnes of gold into the market right before the 2008 financial crisis slapped them in their collective faces.

Almost all this net central bank gold selling occurred while the spot gold price ran more than 7 fold in nominal fiat dollar terms from near $250 oz in early 2001 into the $1990s by August 2011. That time span was also the last major secular bear market for the fiat US dollar.

You see the current fiat US dollar's relative strength versus other major fiat currencies, remains a likely lynchpin for the coming gold bullion bull market mania. 

Since late 2015, even in the face of relative fiat US dollar strength, the spot price of gold has more than doubled in nominal terms.

What happens with gold during the next major secular bear market in the fiat US dollar?

Central banks collectively are obviously front running this question.

In short, prepare to see this long term gold price chart add another stair step to its rising nominal price, as time unfolds.

Stick around, after this short break we'll examine what happened to a critical precious metal's spot price the last time the market collectively raided its warehouses and unsecured ETFs for any remaining physical bullion inventories it could grab.

We'll also examine why now buying gold over US stocks is akin to doing similar back when President Nixon defaulted on the US monetary agreements and went full fiat currency buffoonery.

And finally we'll look at just how coiled the silver price chart is becoming before for the next bull run to come.

The spot gold price closed over $2,150 oz bid completing its 18th week hovering above the building $2,000 oz price support threshold.

The spot silver price made a brief run at $26 oz only to get slapped down closing just below $25 oz spot for the week.

The spot gold silver ratio climbed on gold's strength to 87.5.

Over the last more than three years, we have seen net outflows of gold and silver bullion both underlying COMEX warehouse and unsecured ETFs in the west.

I went and looked back at Palladium today just to examine the key year in time for that particular industrial precious metal often used in autocatalysts and manufacturing.

During the 2000 into the mid-2010s NYMEX palladium warehouses were raided. Then after that was nearly complete, the raid switched over to unsecured Palladium ETF piles underlying.

You can see the key date of 2016 marking then the Palladium ETFs began being raided in earnest.

Not coincidentally to start 2016, back during the JP Morgan Precious Metals RICO price rigging era, we see a crash in Palladium spot prices coinciding with the Palladium ETF raid at the time.

What followed was the palladium spot price more than 6 fold starting from the 2016 trough to the early 2022 peak over $3,000 oz.

Keep this recent palladium price and raid history in mind, when we start slamming into physical silver and gold bullion supply shocks in the coming years.

Moving on to investors wise enough to take gains from the US stock market and roll them over into bullion.

Those doing so now, are doing so at similar levels cascaded from back when President Nixon declared the full fiat currency era 'temporary'. Now some 53 years later, buying gold over US stocks seems to be the better long term value as eventual parity in the S&P 500 seems again inevitable. And potentially even the cherry picked DJIA reaching potential parity is not out of the question for our futures.

Finally a look at the yearly spot silver price in fiat US dollar terms over this full fiat currency era, focusing in on the last over four years of coiling and triangulating spot price action. Technically when silver does this kind of trading pattern it is often preceded by major moves that follow. Lower highs and lower lows year after year suggest we are inching closer each week that passes to silver moving beyond $26, then $30, then eventually the final nearly now ancient 1980 record nominal price high boss of $50 oz perhaps a few years away still.

You can see similar triangular patterns silver created during its 1970s to 1980 thirty eight multiple in price.

We started early 2001 with silver's spot price low near $4 oz. The larger eventual to-de discussed question once $50 is in range, becomes where might silver spike to once it gets launched off this coiling path it is currently building.

Increasing rigged government CPI data from its 1980 high is a potential clue. Ultimately the nominal price high euphoria won't matter as much as the increased goods, services, and competing asset classes your silver bullion position will buy later on.

That will be all for our weekly SD Bullion Market Update. 

As always to you out there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...

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