“Houston, we have a Problem”: 85% of Silver in London already held by ETFs.
With the ongoing #SilverSqueeze and huge associated dollar inflows into silver-backed Exchange Traded Funds (ETFs), it is now time to look at which of these ETFs store their silver in the LBMA vaults in London, England, and to calculate how much physical silver these combined funds store in those London vaults.
These LBMA London vaults are run by seven vault operators which comprise three bullion banks JP Morgan, HSBC and ICBC Standard Bank – and four security firms – Brinks, Malca-Amit, Loomis and G4S.
While many eyes have been fixated on the mammoth iShares Silver Trust (SLV), that is only part of the picture, and there are 13 additional silver-backed ETFs that store their silver in London that people may not be aware of.
By calculating how much silver the ETFs hold in London , we can determine how much available physical silver remains in the London LBMA vaults that is not already held by these ETFs. This then gives an estimate of how much room these ETFs have before they hit a wall of not being able to source any more silver in the London vaults without having to import it or ship it in. And the answer, as you will see below, is not that much room at all.
Because out of the 1.08 billion ounces of silver (33,609 tonnes) that the LBMA claims is stored in the London vaults (as per latest LBMA data to end of December 2020), a whooping 83.3% or 28,007 tonnes (900.42 million ozs) is already accounted for by these ETFs. This is based on ETF holdings as of end of day 5 February 2021.
Add in another 22.22 million ozs (691.3 tonnes) of silver held by Bullion Vault (BV) and Gold Money (GM) in the same London vaults, and there are a massive 28,698 tonnes (or 922.65 million ozs) of silver accounted for in the combined ETFs and in the BV/GM holdings. That’s 85.4% of all the silver that the LBMA claims is in the London vaults.
[Blockierte Grafik: https://static.bullionstar.com…ads/2021/02/Table-1-1.png]
ETFs / ETCs / Transparent holdings store 28,698 tonnes of Silver in LBMA London vaults, over 85% of all the silver in LBMA London. Sources – Provider websites
This leaves only 4,911 tonnes of silver from the LBMA total of 33,609 tonnes that is not already accounted for. That’s a mere 14.6% of total London vaulted silver stocks. The criticality of the situation was even more acute based on end of day data from 3 February 2021, when based on the same calculation approach, there was only 4,366.7 tonnes of silver in the LBMA vaults (13% of the total) that were not accounted for by silver ETF and other transparent silver holdings. On that day, a full 87% of all the silver in London was held the ETFs and other transparent holdings.
Reported Silver Holdings
Importantly, these holdings of Exchange Traded Product (ETP) silver inventories are part of reported silver bullion stocks. As the
(written by Refinitiv) explains:
“Identifiable bullion stocks can be separated into two categories: reported and unreported bullion stocks.
Reported stocks consist of industry, exchange, ETP and part of the government stock category.
Unreported stocks … consist mainly of government and custodian vaulted stocks.”
And notably, says the Silver Institute report, the unreported category is almost exclusively made up of custodian vaulted stocks of silver. According to Refinitiv:
“Terminal market inventory finds its way into Europe, driven by refiners off-loading their metal in times when investment demand is weak. The European and U.S. bullion banks in collaboration with major storage providers remain the main facilitators.”
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