Following-up on
yesterday’s post noting that the London silver market implied lease rate yesterday surged to 5.5%, keep in mind that we’ve recently seen that the actual London lease rate for gold was almost 2x higher than London gold’s implied lease rate.
The potential is that there is an extraordinarily intense physical squeeze developing in the London silver market.
In addition, yesterday’s CME COMEX data indicate that on March 5, 2025 another 1,046 Exchange For Physical (EFP) contracts traded equating to another 5 million (M) oz. of silver that can be drawn from the London silver market vaults.
Figure 1- March 5, 2025 CME COMEX Trading Data; source: CME COMEX
COMEX New York Vault data show that since the start of December 2024, a total of ~105M oz. of silver have been deposited in New York (NY) COMEX vaults with an unknown additional amount of silver being deposited in other private vaults. The daily build of silver in NY vaults has been unrelenting.
There is a 30 day to 45 day transit by ship from London to New York vaults so there is thus potentially still a material amount of silver in transit flowing to the US.
Figure 2 - CME COMEX silver vault stockpiles; source: GoldChartsRUs.com
We await LBMA London silver vault data to indicate vault silver stocks held in London at the end of February 2025, however the rolling and aggressive daily transfer of silver to visible US vaults as well as the spike in London silver’s implied lease rate sends us an ominous signal as to the health of the leveraged London cash/spot silver market.
With January 1, 2025 estimated standing claims (open interest) of 5 billion (B) oz. of silver in the extremely leveraged London cash/spot silver market and a continuing daily appetite for US importation of silver, the situation does not auger well for the world’s most intensely leveraged cash silver market.
When you create an immediate ownership cash physical metal exchange and sell billions of ounces of silver into that market with only a small fraction of that silver available to market to immediately settle such claims, you are asking for trouble - and London now appears to have that in spades.
The London Bullion Market Association released their latest London silver vault data today that show 128.5 million (M) oz. of silver were withdrawn from London silver vaults over 3 months through February 2025.
Of the 722M oz. of silver remaining at the end of February 2025, London vaults hold approximately 525M oz. owned by ETFs.
The 128.5M oz. withdrawal of silver over these 3 months represents a removal of approximately 42% of London silver vault holdings not owned by ETFs during this period.
It is thus not surprising that the
implied 2-month lease rate for silver jumped to 5.5% two days ago on March 5, 2025 with the actual London silver lease rate potentially being much higher.
Figure 1 - London Vault Holdings Of Silver And Gold; source: LBMA
Market signals of silver price backwardation and very high lease rates for silver are indicating that there is very little physical silver currently held in London vaults that is available to market and the onset of a physical silver squeeze in London.
Given the estimated 5 billion (B) oz. of silver spot/cash contracts standing in the London silver market at the beginning of January 2025, this London silver shortage can see a market price excursion develop very quickly if sufficient metal cannot be imported quickly as silver withdrawals continue.
Note also in Figure 1 above that during this 3 month period, a net 7.75M oz. of (heavy) gold were withdrawn from London vaults.
jog on
duc