Silver price discussion and analysis

Silver looking sickly again this afternoon. It hasn't gone below US$30 yet but these low volume rallies aren't convincing and I think we'll see it go under that level tonight and head back towards US$29.50 where it may find some buying support.

New year, next leg up. I've stayed quiet about silver for a while because it needed to have this correction and when I saw it coming back in November I knew it would be bearish for a while. But I think the market for precious metals is turning back up again and the next leg up has commenced.

Trump is going to create currency havoc. This is his last term and Trump wants to write his legacy so expect chaos and precious metals love chaos. There will be ups and downs of course, but in 2025 I am expecting to see higher highs and higher lows.

Will start buying some more silver shares next week.
ARD, SVL, even MKR.
Mick

mullokintyre said:

Will start buying some more silver shares next week.
ARD, SVL, even MKR.
Mick
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added a bit of Physical silver paper on the US market last night, might be good timing to pop up..will see

Diversification is a damn poor surrogate for knowledge.

Marty Whitman

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The physical squeeze due to a global shortage of silver that we noted building through the last weeks of 2024 continues now through the first week of 2025.

In considering the latest data of building global silver bar shortages at exchanges, keep in mind that the November 2024 clearing data from London’s silver market indicates that the net standing claims for physical silver bars in London’s cash/spot silver market is estimated between 3.9 billion (B) oz. (using a 2x multiplier of daily gross London turnover vs. open interest) and 5.8B oz. (using a 3x multiplier of daily gross London turnover vs. open interest).

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Silver’s implied lease rate has increased across all lease tenors in 2025 indicating growing physical silver bar shortage. See Figures 1. and 2. below:

Figure 1 - Silver Implied Lease Rate - 2 Year Chart; source: GoldChartsRUs.com

Figure 2 - Silver Implied Lease Rate - 17 Year Chart; source: GoldChartsRUs.com

The premium for physical silver remains high in both the Chinese and Indian market exchanges:

Figure 3 - Silver Premium On The Shanghai Gold Exchange - 19 Year Chart; source: GoldChartsRUs.com

Figure 4 - Silver Premium In India - 13 Year Chart; source: GoldChartsRUs.com

Both the Chinese CNH Yuan and the Indian Rupee have been rapidly devaluing vs. the USD of late, which will intensify price inflation in those economies, so it is no surprise that these markets should see similar rapid local demand building for physical silver safe haven.

However, growing physical demand will at some point terminate the promissory note physical silver (and gold) promissory note spot/cash market in London where several billion oz. of silver can be demanded for immediate delivery from an increasingly dry silver market.
At that point, the bullion banks and the Exchange Traded Funds (ETFs), the latter of whom Jeff Currie (formerly Goldman Sachs’ Global Head of Commodity Research) claimed had shorted silver that is beneficially owned by their shareholders into the market), will be torched.
This may help to explain why Blackrock’s CEO Larry Fink has been rubbing-up on the UK’s Prime Minister Keir Starmer of late. Blackrock manages the largest silver ETF in the world iShares Silver Trust ‘SLV’ and may need Keir’s help - right now.

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The growing global physical silver market total deficit estimate for 2024 has recently been increased by The Silver Institute to 282 million (M) oz. from 265M oz. of silver. The physical silver shortage in 2025 will likely be worse.

Disappearing silver inventories are not helping those who are short silver to sleep well.

jog on
duc

While one day does not make a market or (usually) the entirety of a major market event, today (January 7, 2025) was a very unusual day as Blackrock Inc.’s share price (‘BLK’) lost 3.3% (see Figure 1. below) while the ‘XLF’ Financial Sector Exchange Traded Fund (ETF) lost just 0.2% today.

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Blackrock has a $150 billion (B) market capitalization that is being adjusted by the market.

This Substack has been closely tracking the London silver cash or spot market that serves as the primary Western physical silver pricing platform used by silver miners, investment funds, silver users, and silver refineries.

It is estimated that London has between 4 billion (B) and 6B oz. of silver sold short into its market.

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Spot silver contracts held in the London market can stand for immediate physical delivery and, because of the London silver market’s size and importance, it stands as a proverbial ostrich in the silver mine.

The estimated gross size of standing physical cash/spot claims for physical silver in London dwarfs the global refined silver bar stock that is available for delivery.

Adding to the intrigue are claims made in 2021 by Jeff Currie (formerly Goldman Sachs’ Global Head of Commodities Research) that silver ETFs purchase and vault silver for shareholders and then immediately short (or sell) claims on that vaulted shareholder silver into the market - allegedly, in essence, selling multiple claims against private assets.

Given that Blackrock maintains the word’s largest silver ETF ‘SLV’ that holds 460M oz. of vaulted shareholder silver (roughly 50% of global silver ETF vault holdings), the spotting scope immediately swings onto Blackrock and questions are asked.

Since the central planners at the US Federal Reserve started lowering interest rates in September 2024, the US dollar index DXY has increased more than 8% driving price inflation globally compounding an existing global silver shortage while US Treasurys have fallen in price across almost all maturities.
Global hysical silver demand is now escalating.

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So we watch.

Was Blackrocks sudden price drop today just episodic trading action or has Blackrock hit a silver iceberg - that it may have helped create?

Figure 1 - iShares Silver ETF - ‘SLV’ - 12 Month Price Chart; source: StockCharts.com

We await Blackrock’s CEO Larry Fink’s next personal meeting with UK Prime Minister Keir Starmer - perhaps he will not bring his entire Board of Directors along this time.

The market takes time to sort things out.


jog on
duc

He who sells what isn't his'n

Must buy it back or go to prison.

Daniel Drew

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During the 4 trading days in the week January 6 to 10, 2025, Blackrock Inc. ‘BLK-NY’ that manages the iShares Silver Trust ‘SLV-NY’ Exchange Traded Fund (ETF) saw two trading days where BLK shares dropped more than 3% in value each day losing a net 6.4% on the week.

Looking at the 1-year stock chart for BLK in Figure 1 below, an ugly looking pattern is starting to take shape.

Keep in mind that BLK is a $150 billion (B) market cap (its valuation) company and is the world’s largest asset manager managing $11.5 trillion (T) of assets for its clients.

If the share price develops further into a waterfall or cascade pattern it is going to have real meaning for the financial markets.

Figure 1 - Blackrock Inc. - ‘BLK’ - 12 Month Price Chart; source: StockCharts.com

A fundamental error in looking at chart data is to look at short-term trends and draw conclusions, however it will be interesting to see how the silver vs. BLK vs S&P500 Index short-term chart develops with time. See Figure 2 below.

Figure 2 - Blackrock Inc. stock price ‘BLK’ (red) vs silver price (silver) vs S&P500 Index (blue) Dec. 18 2024 to Jan. 10 2025; source: TradingView.com

Open Discussion Of Potential Silver Market Failure in London Hits Financial Media​

Over the last few years, silver shortage problems have been smoldering in London however last week an analyst for TD Securities openly stated what this Substack has been repeatedly saying - the London silver market is moving toward “stock-out” or silver delivery default. Given the growing global physical silver shortage and an estimated 4B oz. to 6B oz. of cash or spot silver contracts standing in London this is no small matter.

Silver available for delivery from London vaults to my analysis may be as little as 10M to 50M oz. and is far less than estimated by TD. Remember, the London silver spot contract holders can demand immediate delivery.

Physical silver delivery default or stock-out in London will end the promissory note pricing system put in place in the City of London by the Bank of England (BoE) in 1987 by spurring other spot silver contract holders to demand metal delivery further advertising the failure of the cash/spot promissory note price-setting system in London.

The Potential Nexus Of London Silver To Blackrock and JPMorgan Chase Bank​

We will know with time if last week’s BLK sharp share price drop is related to these public revelations regarding the potential for delivery failure in the City of London’s silver market.

Jeff Currie, Goldman Sachs’ Global Head of Commodities Research at the time, stated on CNBC in 2021 that silver ETFs purchased and vaulted silver and that the ETFs then immediately sold claims to 3rd parties against this vaulted metal, beneficially owned by ETF shareholders, into the market.

That is termed ‘rehypothecation’ and it is illegal if shareholders do not give informed consent to this beforehand.

The astounding potential impact of layered fraud between the regulators creating false price signals by creating a cash metal exchange, with available silver levered potentially 100s of times to what is actually available, combined with rehypothecation of shareholder assets by money managers is difficult to contemplate.

If Currie is correct and we now see silver move up perhaps $100s of dollars an ounce due to a physical market failure, the estimated 4B oz. to 6B oz. of spot/cash market claims sold into the London market are going to potentially generate many $100s of billions of liabilities on the balance sheet of these contract sellers leading to potential rupture of those entities.

Figure 3 - Blackrock Inc CEO Larry Fink

Blackrock operates SLV and SLV’s silver is vaulted for Blackrock by JPMorgan Chase.

Perhaps we will be seeing more photos of fund management and bank CEOs in the future.

jog on
duc

The London silver market, structured by the Bank of England (BoE) to trade promissory notes in the cash/spot silver and gold market destroying physical metal price discovery, is now verging on physical delivery default and then collapse.

While this day has inevitably arrived after building for decades, even bullion bank analysts are now noting how precariously the global physical silver market now stands.

On January 7, 2024, TD Securities’ Senior Commodity Strategist Daniel Ghali noted in an interview that increasing physical silver repatriation to avoid potential Trump tariffs is leading to a draw on London silver vault stock and the potential for what he terms “stock-out” (market failure) in London.

On January 7, 2024, this Substack reported on the sudden 3.3% drop in the price of Blackrock’s stock price that day with no obvious market catalyst and it may be that the Ghali interview, and its implications for Blackrock that manages $11.5 trillion in assets, was a key driver.

The interview can be seen here:

https://www.bnnbloomberg.ca/video/shows/the-street/2025/01/07/impact-of-tariffs-on-precious-metals-markets/

Ghali estimates that “There might be a billion ounces sitting in the London vaults, but only 300 million of that is actually freely available for purchase, according to our estimates.”

In fact, much less silver than that appears to be available to market from London vaults.

London’s Available Silver Vault Stock​

The latest London vault stock data from the London Bullion Market Association (LBMA) states that as December 2024, London vaults held 828 million (M) oz. of silver as can be seen in Figure 1.

Figure 1 - London Silver Vault Stock - December 2024; source: LBMA

Ghali states that the LBMA are “custodians” of this silver. The LBMA are not custodians as that silver is privately held in private vaults in London.

Silver bars held in London vaults by Exchange Traded Funds (ETFs) amounts to 533M oz. leaving a remainder of 295M oz. However, only a portion of the 295M oz. remainder appears to be available to market.

Figure 2 - London Vault Silver Holdings (Silver Bar Stock) November 2025; source: GoldChartsRUs. com & LBMA

Figure 2 above shows that the London vaults flat-lined in their holdings from Q3 2022 to present while global the global physical silver supply deficit ran at approximately 497M oz. over this period.
That the London silver vault stocks have been relatively inelastic during this period of global silver shortage indicates that further silver deliveries “in size” from London vaults are predicated upon silver being first imported before delivery can be made to market in London.
There may currently be as little as 10M oz. to 50M oz. of silver available for delivery to market from London’s silver vaults with the remainder privately and closely held.
The CME COMEX silver market in New York currently holds 74M oz. of Registered Silver bar stock (i.e. available to market).
The year 2025 appears likely to see a further 250M oz. to 500M oz. silver supply deficit that will need to be met with a further draw-down of global vaulted silver stocks.

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As an historic monetary and industrial metal with unique qualities, silver is an essential metal and increasingly so for wealth preservation given the current central bank, currency, commercial bank, and financial system instability - physical silver in possession is an asset that is no-one else’s liability.

Silver Market Resolution​

Given this backdrop and with an estimated 4 billion (B) oz. and 6B oz. of physical silver contracts sold short into the London cash market where contract holders can stand for immediate delivery, the global silver market is heading for an ‘event’ as contract holders increasingly ask for their metal to meet market need.

Silver market delivery fails and default on metal exchanges with near zero current investment enthusiasm from the Western retail investment market will serve up a global price shock. With the gold-to-silver price ratio standing near 90x and given the current setup, a return to an historic price ratio closer to 15x appears likely to overshoot drastically below that ratio - nobody knows exactly.

Many stories will be told by the financial press as to why the Great Silver Price Reset occurred (Orange Man!) but in reality the proximal causes are not important.

The ultimate cause of the coming silver market seizure, then market failure, that is being revealed is the establishment of a fraudulent price-setting mechanism for gold and silver in London by the BoE with apparent coordination by the Bank For International Settlement (BIS) - our central planning ‘regulators’.

Given the additional and potentially massive estimated liability that Blackrock and other bullion bank players may face in the London market (multiply 4B oz. to 6B oz. of silver contracts by your estimated price move), the sudden revelation of the true availability of silver and the impact of the knock-on price excursion to the balance sheet of financial institutions will distress many of those institutions. Give that some thought.

In the end, frauds always collapse so what is happening is no surprise.



jog on
duc

Silver delivery:

Central to understanding the approaching silver delivery default in the City of London’s silver market is that the London vault stocks of silver published by the London Bullion Market Association (LBMA) are privately held metal and not all of this silver stock is available to market. Only a fraction of that vaulted silver is available to market and this is axiomatic.

This Substack has estimated that, while the Wall Street Journal and market analysts claim that there are hundreds of millions of silver oz. in vaults available for delivery, there may be as little as 10 million (M) to 50M oz. of silver available for delivery from London silver vaults out of London’s total silver vault stock. See this and this.

It has been noted previously that as London vault stocks of silver were drawn-down and approaching the 25,500 tonne (820M oz.) level that the market implied lease rates surged indicating very high physical delivery demand.

The latest data (December 31, 2024) show that London vault stocks of silver have again recently been drawn-down, now nearing 25,700 tonnes (826M oz.), and silver’s implied market lease rate is now rising again indicating physical market stress.

Figure 1 - Silver Implied Lease Rate - 25 Year Chart; source: GoldChartsRUs.com

Figure 2 - London Vault Silver Holdings (Silver Bar Stock) December 31, 2024; source: GoldChartsRUs. com & LBMA

Another indicator continuing to break higher to record levels is price spread between the longest dated or last future contract price for silver and the cash or spot price for silver.

The market is strongly signaling a higher silver price is anticipated and this spread has never been this high previously even at $50 /oz. silver.

Note also that in the past as market liquidity of physical silver becomes critical, the cash/spot price exceeds the futures price - as can be seen in Figure 3 - showing market participants scrambling for immediate silver in hand.

Figure 3 - Silver COMEX Long Futures Contract Price Minus Spot Price; source: GoldChartsRUS.com

Given the estimated 4 billion (B) oz. to 6B oz. of spot silver contracts allowing for immediate delivery and sold into the London cash market, this market continues to be very interesting.

Lots has been written about recent accelerated imports of silver to NY COMEX vaults and how that is being driven by CME COMEX traders acquiring physical silver allegedly to avoid having to pay Trump’s coming tariffs on imported silver.

Question: If Trump does apply tariffs on imported silver does that mean that US silver miners will receive a market premium on US mined silver, above the London price but below the tariff rate?
If US silver miners receive such a premium on their silver production, do you think that will drive premium net profits for these miners?

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jog on
duc

Studying market lease rates of gold and silver is valuable as it gives the price to secure physical metal in the London and NY COMEX gold and silver exchanges.

When an immediate ownership cash market such as the gold and silver spot market in the City of London has been constructed to trade and create claims for infinite amounts of gold and silver cash/spot promissory notes, the availability of such lease data to give insight into physical market conditions is an anomaly.

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On January 30, 2015, the London Bullion Market Association (LBMA) stopped publishing Gold Forward (GOFO) and Silver Forward (SIFO) data from which the general lease rates in London could easily be calculated.

Today, what used to be commonly available from numerous sources on the web is maintained within bullion banks and trading houses. It is not for public consumption.

However, an ‘implied lease rate’ can be derived and calculated from futures market data as an approximation of market availability of silver and gold to the market and is provided through the valuable work of Nick Laird at GoldChartsRUs.com.

The various lease periods, or tenors, give an estimate of the cost to borrow gold and silver to deliver on these paper contracts on rare occasions where delivery is demanded by the contract holders and we can see a phase shift in the market over time as physical metal has become more scarce.

London Historic Lease Rate Patterns​

From the LBMA’s trade paper The Alchemist Issue #29 December 2002, we can see the London gold lease rate (per annum) for 1-month and 1-year lease tenors from 1993 through 2002.

Figure 1 - London Gold Lease Rate 1993 to 2002; source: Issue #29 December 2002 The Alchemist - LBMA

Of note is that during this period in time the cost to lease / borrow gold for a 1-month period (purple line) was generally less than the cost of leasing for 1-year (red line). This makes sense as it reflects reduced risk premia and greater availability of gold for periods to market allowing the metal borrower to presumably secure purchase of gold from other sources.

When traders are required to make physical delivery, they generally like to borrow gold and silver for as short a period as possible to minimize their costs of delivering metal on their contracts when this is required.

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Silver And Gold Markets Can Become Disorderly​

Figure 1 also shows the 1-month gold lease rate occasionally spiking above the 1-year lease rate during relatively short periods of market shortage of physical gold to market participants.

However, note in Figure 2 below that for the last 3 years the implied market lease rate for silver has maintained an inversion of this historic pattern with short term lease rates being higher than longer term lease rates. This is during a time of metal shortage where global silver vault stockpiles have been drawn-down by more than 500 million (M) oz. to meet market demand.

One signal from this inversion of historic lease rates is that physical silver bars are not as available to the market as financial market commentators have told us. As discussed previously, only a small fraction of the silver vaulted in London is available to market for sale (or increasingly, for lease).

Also, because silver is relatively bulky to store in terms of its value to its volume, silver’s implied lease rates have often been negative or near zero over long periods.

That has not been the case since 2022 - a signal further supporting the secular silver market liquidity shortage thesis.

In mid-2022, silver’s digital market price was as low as USD $18 /oz. while silver is now $30 /oz.

Figure 2 - Silver Implied Lease Rate - 17 Year Chart; source: GoldChartsRUs.com

Gold is showing a similar implied lease rate inversion to silver indicating a market that is not flush with physical bars either.

Keep in mind, that there are large gold holdings in official/government stockpiles that have (and are) being lent into the London market coordinated by the Bank of England.

There are no large stockpiles of silver in official stockpiles that are readily available in-size to infuse markets.

Figure 3 - Gold Implied Lease Rate - 17 Year Chart; source: GoldChartsRUs.com

The continual 6 year long drum-beat of global silver supply deficits continues this year and the static silver vault stocks in London combined with a sustained high silver implied lease rate together tell us something.

The 4B to 6B oz. short position in London’s cash silver market will not be sustainable as the global silver shortage continues.



jog on
duc

It looks like silver is brewing for something here. As we know it follows gold but has some more recent value in solar panels and missiles which have been going out the door. So, industrial use is a factor on top of the monetary value.

It's been stuck ranging between 28-32 for about 10 months after breaking out in Apr 24 but the higher lows make it look like it's just waiting to break up properly from this range. I thought it had back in Oct 24 but it faked us out. Getting back above 32 is important. I'd really like to see that firm up as a support level next time it tests it to the down side.