Silver Bullion Being Airlifted to Meet Eastern Demand

The LBMA, or London Bullion Market Association, held its annual conference in Lisbon, Portugal, this past week.

Over 700 attendees were present. Many of them have traded precious metals derivatives in their careers, according to the LBMA's Ruth Crowell years back. Yet, many have never actually seen or touched a large good delivery gold bar throughout their professional work lives.

One of this week's LBMA conference attendees, Nicky Shiels from Pamp Suisse, took to Twitter to give insights on what she saw and heard in Lisbon.

To corroborate her claims. This past week we got an update on Indian Silver Bullion Import figures through September 2022. India imported their second-highest monthly silver bullion importation figure, consuming over 56 million ounces. 

Around 98% of these were likely large 1,000 silver bars, with over half of the imported silver bullion coming out of the United Kingdom and more than likely out of the City of London silver warehouse network.

Who wants to bet the LBMA silver warehouse inventory levels will drop to a new all-time record low the next time they update their data?

Some of the London silver bullion eastern outflows are coming out of silver ETF selloffs as silver spot price in fiat US dollars has been weak throughout 2022.

The vast majority of the supposed London silver bullion bar pile is unsecured silver backing the world's largest risk-laden ETF, SLV.

Turning to the COMEX here in the United States.

The COMEX Silver Registered pile continues shrinking now near only 38 million oz.

The COMEX Silver Eligible pile has also been shrinking steadily (we can presume some of which has shipped east to help meet ongoing record-sized Indian silver bullion demand).

Note that over +100 million oz in the current COMEX Silver Eligible pile is also spoken for unsecured SLV holdings whose custodianship is managed by and supposedly stored within the JP Morgan vault in New York.

The still dominant warehouse pile in the silver COMEX network has the majority of its holding tied up with SLV, the unsecured ETF, many of you would never own but for a short-day trade or options bet.

And so on, more and more 1,000 oz silver bullion bars are airlifted to India and or refined into smaller-sized coins, bars, and rounds headed into many western world long-term silver bullion buyer stashes outside the financial system.

And while for decades running silver may have been treated like mere base metal, the fact of our modernity is that it remains essential for industrial applications, and it is still treated increasingly by many around the world as a long-term store of value at these spot price points.

This Visual Capitalist metals mined illustration shows how tiny the annual fresh mine supplies of gold, silver, and platinum metals are relative to the base and more common metals. My contention remains that the major precious metals will increasingly be viewed as so in the coming years and throughout this decade, unfolding as store-of-value crises unfold.

Both gold and silver fiat US dollar-denominated spot prices rose on the week's trading.

The spot silver price cleared and settled near the $19.50 oz ask.

The spot gold price increased slightly to close near the $1,660 oz ask price.

The gold-silver ratio tumbled from 90 to close at 85 on the week.

Given the fiat US dollar spot price weakness for gold bullion this year and increasingly large devaluation troubles with the fiat Japanese yen and fiat British pound (not sterling silver for well over a century now). 

This measure of value using gold illustration over the last 100+ years reflects the continued losses of these three major fiat currencies versus gold bullion.

The fiat US dollar is down nearly -99.7 versus gold bullion since 1920.

The fiat British pound has lost -99.92 in physical gold purchasing over that same timeframe.

And finally, the fiat Japanese yen has lost -99.995% in gold bullion buying power.

Who wants to be on the wrong side of this continuing trend ahead?

The fiat Japanese yen had another massive relative loss versus the relatively strong fiat US dollar again this week, blowing beyond 150 intra-week. We must go back to around 1990 to find such a weak yen vs. US dollar exchange rate.

Judging by the fact that the Bank of Japan is now having to borrow fresh fiat US dollars from the NY Fed, it is obvious to anyone looking with a functioning synapse that not all is well in the land of the rising sun currently.

This week, the ECB and the Swiss National Bank continued taking fresh fiat US dollar loans from the NY Fed. In contrast, the battered Swiss commercial bank Credit Suisse's economist took to financial propaganda quoted this week stating, "We do not believe that the increased demand for US dollar liquidity by domestic banks reflects any liquidity issue in the Swiss banking system." I have a bridge to sell you if you buy that claim.

Recent data reflects that US consumers' personal savings have plunged by tenfold since the pandemic check handouts.

I want to close this week by mentioning a trade you might consider if you are fortunate enough to have dry powder and perhaps bought high-demand silver bullion products back when their price over spot premiums was relatively reasonable.

In early 2019 on this SD Bullion channel, I showed viewers at the time that for many years running, 1 oz American Silver Eagle Coins were the #1 most purchased bullion product in our industry, and at SDBullion.com

In just over the last three and a half years, the US Mint has proven dysfunctional and inadequate in keeping up with global silver bullion coin investment demand.

This price premium on American Silver Eagles hit a new all-time record price over spot percentage premium this past week.

Here is the arbitrage that other silver bullion buyers and I are taking advantage of now.

By currently selling, for instance, a 500 oz US Mint case of 1 oz American Silver Eagle Coins for +$10.50 oz over the silver spot price at SDBullion.com/sell, you can immediately offset that sale by then buying lower premium silver bars.

By doing them at that same time, you would reduce price fluctuation risk. With currently wide silver bullion product premium differentiations (tax ramifications aside), you could come very close to converting 500 oz into nearly 650 oz in .999 fine silver bullion bar weight with the proceeds.

If you bought 1 oz American Silver Eagle coins back when their price premiums over spot were relatively razor thin compared to their record size in percentage terms, they are at today. 

This is an opportunity to gain overall ounces in your silver bullion stack.

That is all for this week, as always, to you.

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...