Silver Bullion COMEX & London Piles Shrink at Unprecedented Pace

Recent silver spot price selloffs propel unprecedented silver bullion market demand. Especially on the retail side with retail buyers picking up thousands of ounces of silver bars and silver coins.

Late last week, fiat Federal Reserve Chairman Jerome Powell addressed his western central bank allies and the larger investing world at the annual Jackson Hole meeting. His speech of eight and half minutes can be boiled down to the following 30 seconds of hawkish inflation fighting tough talk.

Taken at their word, the Federal Reserve plans to raise its Federal Funds Effective Rate again soon ahead. Currently sitting at a paltry 2.33%, the fiat Federal Reserve note or fiat US dollar continues losing likely negative double-digit percentages in real purchasing power on an annualized price inflationary basis. 

Such hawkish fiat US dollar talk has further boosted relative fiat US dollar strength exhibited this past week, as the dollar gained versus other competing fiat currencies such as the fiat euro, yen, pound, and yuan.

The fiat dollar DXY index is now at over 20-year high levels. While we may all be bearish on fiat US dollars long-term, I would bet that most of us would prefer directly being paid in them over other faster devaluing competing fiat currencies currently issued. 

Commodity price selloffs in fiat US dollar terms of late have been an illustration of the fiat US dollar's relative strength versus other competitors, which is illustrated precisely here by the comparable gold price in 2022 in fiat USD and five different significant fiat currency denominated gold prices for the year.

Only the fiat US dollar price is negative on the year's performance.

Contrasting all this high praise for the fiat US dollar strength, the Russian Federation's Vladimir Putin recently gave a speech about growing secular global inflation criticizing western leaders and their central bank's actions as highly irresponsible. 

See what Putin had to say a month and a half ago as most people worldwide continue to increasingly suffer under a new high inflationary secular regime. Pronounced since the late 2019 Jackson Hole ‘Go Direct’ western central bank agreement to blow out their respective fiat monetary bases in coordination.

Both the silver and gold spot price markets sold off in this week's trading, and in this week’s video embedded above, we will look at longer-term charts to get a sense of where low-end bottom support may be found in the weeks and months to come.

The spot silver price sold off nearly -$1 fiat, not per troy ounce for this week, likely to close just over $18 oz.

The spot gold price is likely briefly pierced at the important psychological level of $1700 oz but will likely close around $1715 oz bid this week.

The gold-silver ratio climbed to 96 and will likely close this week at 95.

On a technical basis, the gold silver ratio appears that without a change in fiat Federal Reserve monetary and US fiscal policy, the triple-digit gold silver ratio test is likely shortly. The blue line illustrates the gold-silver ratio throughout the fiat currency era since 1970. For silver bullion bulls, note the bottom half of this chart below.

Using the thin green line, you can see there have only been two other times over the last five decades when the then silver spot price was this relatively cheap versus the spot gold price. Once during the brutal early 1990s bullion bear market, the early 2020 Covid GSR blew out to Great Depressionary 1930s levels over 120.

So here we have again, a historic silver buying opportunity for long-term bulls.

Moving on to a longer-term gold spot price chart in fiat US dollar terms, many gold bears are out and calling for the spot gold price to fail its comparable current support level in the weeks or months ahead. Inducing what could be a selloff down towards Covid low $1500s oz.

Now just a brief pause here so you can get a recent gold market analog I purposefully left on this chart, the 2008 global financial crisis where we saw gold fall from near $100 to a low near $700 oz, a -30% selloff. Repeating that downside performance says such a selloff is not out of the question.

A significant question in such a scenario would, of course, be which if any bullion dealers 

would have any reasonably priced gold bullion near spot price if that were to come indeed to pass.

Moving on to a longer-term silver spot price chart in fiat US dollar terms, many silver bears are out and calling for the spot silver price to fail its near current support level in the weeks and months ahead. Inducing what could be a selloff down towards Covid lows near $14s oz or lower.

Of course, in that scenario where you might be able to buy silver bullion priced with premiums below $20 oz would be hard to imagine.

I strongly suggest keeping some powder dry if such drastic selloffs were to pass but don't count on being able to buy bullion easily in either silver or gold selloff scenarios.

Perhaps pay attention to what the world's largest and historically longest bullion buyers are already doing near-record volumes, given spot price weakness of late.

For instance, China has recently been importing near-record gold bullion volumes, levels not seen since the spring 2018 lows near $1,300 oz gold spot prices.

Of course, for many weeks on this SD Bullion channel, I have shown you bullion industry data illustrating that India is on pace this year to import nearly 1/4th of the world's annual physical silver supply in 2022 alone.

This video shows the full fiat rupee currency era silver spot price chart's current massive cup-handle. It likely illustrates a large motivational force for why India’s steadily wealthier 'poor men and women’ are increasingly betting on silver over gold in their jewelry and investment bullion buying.

It would not surprise me if we came back to this chart in a couple of years' time and saw the spot silver price in fiat rupee terms twice or more than what it is today.

I say this confidently because of the building of bullish fundamentals, making it increasingly difficult for the fiat financial powers to buy the silver market and its suppressed spot price further.

We continue to see massive silver bullion outflows from London (much of which is headed to India increasingly this year), with a float that the nation alone could demand in 2023 alone. Couple that with a rapidly falling pile size in available registered COMEX silver bullion fractionally reserved and backing that major price discovery exchange.

Today, registered COMEX silver dipped under 50 million ounces. The speed of over -100 million ounces of registered COMEX silver either pulled or moved to the eligible pile on that exchange since the early Q1 2021 Reddit Wall Street Silver Squeeze phenomenon kicked off is unprecedented. 

And so, as you can see by ongoing big bullion industry data, it is not me alone merely saying this. Industry data illustrate my points in perhaps the most significant way we have ever seen.

As silver and gold fiat-denominated spot prices dip, the world is increasingly taking advantage of current fiat US dollar strength. Swapping a cornucopia of faith-based currency notes for the world's hardest historical monies has stored value with gold bullion and silver bullion, respectively.

That is all for this week's 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...