Deliverable Silver Stocks At The COMEX Reach Historic Low

According to the CME Groups recent release, Comex Registered Silver inventories reached an all time low yesterday.  The Registered Silver inventories are those stocks ready to be delivered into the market.  Looking at the data put out by Sharlynx.com, Registered Silver Inventories haven’t been this low going back to the 1970’s.

The Registered Silver inventories suffered a large drop yesterday, when 3.6 million oz (Moz) were transferred out of three depositories.  The CNT Depository transferred 374,494 oz, the Delaware Depository transferred 1,492,945 oz and JP Morgan, 1,742,050 oz.  The 3.6 Moz were transferred out of Registered inventories and into the Eligible.  Thus, there are now only 25.3 Moz of Registered Silver inventories at the Comex:

COMEX-Silver-Inventories-022416

The chart chart below only goes back until 2001, but as we can see, the Registered Silver inventories have never been this low.  Before yesterday’s 3.6 Moz decline, the last record low was in July 2011 when the Registered Silver inventories fell to 26.7 Moz:

COMEX-Registered-Silver-022416

What is interesting about this chart is the rapid decline of Registered Silver Inventories over the past year compared to the down trend from 2008 to 2011.  From the beginning of 2008, the Registered Silver inventories fell from 90+ Moz to 26.7 Moz in July 2011.  Thus, the total decline was 64 Moz over this 3 1/2 year period, averaging out to be 18.3 Moz decline per year.

COMEX-REG-SILVER-1-Year-chart-NEW

Now compare that to the 45 Moz decline starting at the peak in March, 2015 (70.3 Moz).  This was a huge 45 Moz decline in less than a year… almost three times the decline rate compared to the 2008-2011 period.

Registered Silver Inventories Owners Per Ounce Surge Over Past Month 

Since the end of January 2016, Registered Silver owners per ounce surged 75% from 20 to 35:

COMEX-Owniers-Per-Oz-022416

In April 2015, there were a little more than 10 owners per ounce of Registered Silver at the Comex.  However, this began to rise slowly, then surged in the beginning of February from 20 owners per ounce to 35 yesterday (actually 34.53).  What is even more interesting is looking at the same chart (showing more detail) going back until 2005:

COMEX-OWN-PER-OZ-022416

In July 2011, we can see the total Open Interest (second chart from top) falling along with the owners per ounce.  Thus, there were two falling Red Arrows in July 2011 with one pointing up showing the increase in owners per ounce.  The reason for this is simple… as the Registered Inventories decline, the owners per ounce increases.

Now if we look at the current trend, we see a much different picture.  First of all, the current decline of Registered Silver Inventories (third chart from top) is much steeper than in 2011 as well as the owners per ounce.  Furthermore, the open interest is trending higher while the Registered Inventories continue to decline.  That is shown by the up arrow in the second chart from the top.

This is a strange anomaly indeed.  Something just isn’t right at the Comex.  Not only are the Registered Gold Inventories at historic lows, so are the Registered Silver Inventories. 

It will be interesting to watch the Registered Silver Inventories over the next 3-6 months as the broader stock markets continue to decline.  I believe this decline of Registered Silver Inventories denotes a tightness in the market even though certain indicators don’t show it.

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47 Comments on "Deliverable Silver Stocks At The COMEX Reach Historic Low"

  1. Very interesting article, particularly in light of the fact that silver to gold ratio closed over 80/1 yesterday.

    Another sign that the great reckoning is rapidly approaching. It seems that some of the power players are taking notice and quietly stacking.

    Thanks,

    SteveW

    • Fully expecting the premiums on American Silver Eagle coins to be equal to spot by the 4th of July & will have exceeded spot by Labor Day.

  2. Koos Jansen (or whatever his other real Dutch name is, can’t find it offhand) just published a post that directly talks about the exact subject of your post. Although it doesn’t address you or your post directly in any way, the timing may be pure coincidence.

    https://www.bullionstar.com/blogs/koos-jansen/comex-gold-futures-can-be-settled-directly-with-eligible-inventory/

    And Koos isn’t exactly a “shoot from the hip” idiot, almost always he does his research right & knows what he’s talking about. Basically the gist of his blog seems to that the whole “crashing registered inventories” may be a tempest in a teapot. Contracts can very well be settled out of eligible inventories. At least for gold, but quite possible same is true for silver as well?

    • OK managed to find his “other real Dutch name”, it’s Jan Nieuwenhuijs. Or maybe that’s a fake online persona & Koos Jansen is the real name. A quick search reveals Jan Nieuwenhuijs was also a somewhat famous Dutch painter who has now died.

      Anyway none of this really matters, but just mildly amusing factoids. 😉

      If you could respond to the original topic based on his blogpost, that would be far more relevant.

      • Yes you are correct, his real name is Jan Nieuwenhuijs. In 2012 and 2013 he used to write on a Dutch site called Biflatie.nl. I doubt whether this is known by other Dutch visitors here. After that he opened his Koos Jansen blog and now he’s writing for Bullionstar in Singapore. And as far as can judge a close friend of Willem Middelkoop the Dutch author of the Big Reset.
        But about his story, of which I’m convinced it’s true, your american fellow Harvey Organ wrote about this item too on I’m almost sure on the date April 16th, but the year I don’t remember. Must have been either 2012, 2013 or 2014. He made the statement that contracts were bought of on or a couple days before the expiry date with common options which matured later in time. If this applies to silver too, I’m not sure. He said he would follow up on this story, but either never did, or I missed it, which is also likely.
        Anyhow there is more to this story then meets the eye.

        • BTW, Harvey Organ is Canadian & not American. But thanks for you message. 😉

          Still waiting for Steve “Rocco” himself to reply to me. I notice he made the post & there have been lots of comments posted here. But no comments/replies from Steve to any of them, not just mine. (SteveW seems like a different person.) This is very unusual, most of the times Steve is very active here responding to questions that look deserving of response. Hope he’s doing fine.

        • Koos/Jan whatever | February 29, 2016 at 2:44 am | Reply

          Yes, my real name is Jan Nieuwenhuijs, my blog name is Koos Jansen. No secret about it. In 2012 I – for the sake of fun – opened a Twitter account with the name Koos Jansen and started tweeting in English. Little did I know that would grow into a blog and would become my job one day.

          • OK, thanks for that “Koos/Jan whatever”! 😉

            Now it would be really nice for Steve to actually address the substance in your post. I noticed Dave Kranzler saying you (Koos) are misinterpreting some COMEX document & it’ll be too time consuming for now for him to address your claim point by point.

            Steve, where did you go?

          • Theravaida,

            I apologize for the lack of comments this past week. There were several issues that took my time away from the site. However, I am back and will be posting new articles again.

            As for the subject matter of Eligible Inventory being a deliverable mechanism, Koos did an excellent job detailing it on Bullionstar. However, I would like to highlight these two sentences from that article:

            there are some circumstances in which a privately negotiated or ‘‘ex-pit’’ trade may be warranted.

            Last but not least; below is a chart showing EFP volume, clearly this concept is not something unusual. On average 4 % of total daily trading volume in GC is performed through EFP. If EFP volume is 8,000 a day the lower bound is that the open interest is decreased by 8,000 contracts, the upper bound is that the open interest is increased by 8,000 contracts.

            While Koos is correct that Eligible Gold and possibly Silver may be warranted for delivery for OTC Market private trading purposes, this seems to be a small part of the overall delivery volume.

            Furthermore, I believe the majority of Eligible Gold & Silver is held in tight hands by wealthy or institutions. There is a good reason why Registered Gold and now Silver is declining rapidly.

            steve

          • Hey, no need to apologize Steve, you’re doing a great service for the community. I was more concerned whether you’re doing alright. 😉

            Thanks for your take. Yes, it seems they might be able to keep the game going just a little bit longer than purely taking registered inventories into account….but hopefully, not all that much.

  3. In 2011 the low silver inventory signaled the top in silver. This can mean two things.
    a) The top is in in silver at $15.50. or..
    b) An uptrend will start with the inventory at record lows bucking the trend.
    The smart money, the commercials, are betting on a) that silver will be headed towards 8 dollars an ounce probably on the back of sub 30 dollar oil which is another strong correlation.
    If b) is right silver could rocket to $100+ dollars an ounce starting a bull market from almost no supply.
    The commercials are right 99% of the time.
    Will they be wrong this time? I personally hope so.

    • Barry,

      I think your premise is wrong. The 2011 inventory is not causally related to the market price in 2011.

      Clearly $15.50 is not a top in silver by almost all potential measures of the future price of silver. The Commercials are right 99% of the time because it is “smart money”. the herd mentality doesn’t give a RA about the comex or any other inventory. The price of silver will follow the price of oil down for so long as silver is a “mere” commodity, as evidenced by the silver to gold ratio, closing solidly above 80 to 1. It could easily go to 100/1.

      Silver will not rocket to anything until it is recognized as “money”. When the market finally makes the connection it will shoot to the moon. Buy some authors, http://www.kitco.com/commentaries/2016-02-24/Why-Central-Banks-Will-Buy-Silver.html, it could go to a ratio of 5 ounces of silver to one ounce of gold. So if gold goes to $5,000/oz. silver would be $1,000/oz. Silver will again be “money” and who knows what it’s dollar value will be. The sad truth is that it is the value of the dollar that will be in the toilet, that an ounce of silver will buy the same amount of anything that it buys today but our “US Dollar” centric point of view will be forever changed. It is the US dollar that will be worthless.

      Keep on stacking for as long as you can buy silver at near cost.

      Buy for cash and stash.

      SteveW

      • Re: “The sad truth is that it is the value of the dollar that will be in the toilet, that an ounce of silver will buy the same amount of anything that it buys today but our “US Dollar” centric point of view will be forever changed. It is the US dollar that will be worthless.”

        Excellent practical summary. Rgds

        • In such case the different assets will adjust a lot probably. In the meantime silver is going to the ceiling as shown today despite oil and copper strength.
          Dismal performance.

      • I own physical gold and silver. I trade gold and silver futures as a hedge to my physical position. Along with charting analysis I use the COTS as a source of info and they have been extremely reliable.
        The above charts have been implied to being bullish. But to my eyes they look bearish in the short term from a trading viewpoint.. Not bullish as the article suggests.
        That is why I asked whether the implication of this article is that this time is different. Because using the above charts the article could have been titled “why you should short silver in the next couple of months”.

  4. Unfortunately for silver hoarders all indicators show that gold ratio at 82 is going to rise more and probably much more above 100.
    Compared with gold, silver is a strong sell…

    • Not that it can’t go to 100 but with strong support in the 80 region the odds are higher for 10 to 1 than 100 to 1 from a historical perspective.

      • No, because new gods of money such chinese central banks decided that gold is wanted, not silver.

        • It’s all in the charts. From experience technical analysis trumps fundamental analysis most of the time. The charts have been saying that silver was overbought and will pull back to the mid 14 dollar mark creating an inverse head and shoulders. The head and shoulders will propel silver through a 4 year descending wedge and then it’s off the races. i shorted silver at $15.50 I took off my shorts yesterday at 14.80 and will buy physical silver on Monday with my profits.
          I am now looking for another long.

          • Hope you will be right but odds are not in our favour exc ept maybe if gold breaks out strongly above 1400… Maybe it will enough to extract silver from this 10g gravity…

    • “Compared with gold, silver is a strong sell…”

      Would you expand on this a bit so I better understand what you mean? Thanks.

      • I think that there is no reason for speculators which is 99% of the exchange rate for silver with dollars and gold to bid up the silver prices (silver destroyed at 14.8 despite copper and oil rise with gold/ratio at 83 with huge momentum, gaining 1 one nuit/day).
        It is also known that there is more tightness in the gold market than silver market, there are several reasons but the major one is chinese VAT on silver.
        So I think one strategy is to buy physical gold (with less premiums and storage fees) and shorting paper silver like SLV.

        • RD,

          I think you have it absolutely backwards. I, for one, am trading gold for silver. The average ratio in the 20th century was 47. Historical ratio has been 16 to 1 and in 1792 US Law mandated 15/1. I look at this 80+ ratio as a gift, if for no other reason than the general principle of “reversion to the mean”. If I can get 80 ounces of silver (which turns out to be effectively 75 after shipping and premiums) for one ounce of gold and, when silver is money again, be able to buy it back for as little as 5 ounces of silver – it is a no brainer.

          See Chart in http://www.kitco.com/commentaries/2016-02-24/Why-Central-Banks-Will-Buy-Silver.html

          Buy for cash and stash.

          SteveW

          • Is there any particular reason you believe that the gold-silver ratio should revert to a mean calculated over some period of time? If a rock finally gives way and rolls down a mountain, will it roll back up because its mean altitude was higher?

            I happen to think silver is a great buy at these prices, but Ive never seen someone clearly describe why there should be a reversion to the mean.

            Mike

          • The problem is you may be right one day, but in the meantine I think the odds are very high for gold/silver ratio at 100 or above, so no hurry to buy silver instead of gold.

            My point would be considered as invalid if silver break decisively the 18 level for several daily and weekly close above, confirmed by silver miners and big volumes.

            If not I consider, gold/silver to rise on the big view.

          • Mike,
            There is no reason to reverse to the mean but your example has no value in our issue.
            IMO the major and only possibility for silver to break for commodities slaughter is if gold make a strong breakout (above 1400 according to technical analysis).
            It might be enough for western speculators to pile in silver and break this multi year downtrend channel which is gift from God for COMEX commercials.

  5. Mike,

    Reversion to the mean is intrinsic to all cyclical markets but definitely not rocks. Did you actually look at Moolman’s Gold/Silver ratio history chart (see my post above for link). One look and you will understand completely.

    Silver is and will remain a good buy up to the point that the FED totally destroys the dollar and silver is money once again.

    SteveW

    • This Moolman’s article is complete crap imo.
      It is up to western comex commercials if they think there is big money to be made on the long side.

  6. The US Mint just can’t source enough Silver to sell at this pace…

    US Mint 2016 Silver Eagle Sales

    January 5,954,500

    February 4,045,500

    Total 10,000,000

    • Physical purchases do not mean anything for “price discovery” except if 1000 oz major shortgages.
      It cannot happen imo with VAT on silver in china.

      • How about VAT in India; they have been a much bigger importer of silver

        • Because india cannot absorb half a billion ounces a year which is the only level that could put some pressure like there is on gold.
          Who can buy so much silver : the only answer is china and the VAT seals the fate of silver : purchase by chinese is nearly nil.
          A chinese will not pay a 17% premium when it is 0 on gold. Period.
          In europe, it is the same so even if demand finally arises for precious metals it will be mainly gold.

  7. Ray says: There is a lot of knowledge on this site and it is appreciated. But one thing I never see is:
    Just how many ounces of silver is it going to take to see a person through the catastrophe that is on it’s
    way to us all? I don’t have a clue, do you?

    • Silver or gold may not get you through a catastrophe. Food, water, water filters, blankets, flashlights, a firearm, cash in small bills, first aid kits, etc. are likely to give you the best chance.A lot of the same stuff recommended by FEMA or Red Cross in hurricane-prone areas.

      After a currency crisis, or cyber war, or EMP, then the quality and quantity of what you own becomes a consideration. During it is unlikely one will give up food for metal. They may trade batteries or toilet paper for silver during a crisis.

      • But once you get on the other-side of the catastrophe whether your nation fares well or not…silver and gold will shine brighter then empty promissory notes. There are no guarantees in life, but 10,000 years of history suggest the metals are where you want to be.

  8. Koos/Jan whatever | March 1, 2016 at 1:13 am | Reply

    @Theravaida,

    Let’s just say Dave stopped approving me to comment on his blog 😉 He’s not open for real debate.

    • Koos,

      Thanks for dropping by and leaving some comments. Excellent job on detailing the ability for delivery to be taken place via the Eligible Inventories.

      steve

  9. I guess the question is WHY are the governments imposing a VAT on silver in the first place…What are they afraid of?

    • I think you already know. They know silver is the linchpin. When the price can no longer be manipulated downward, real price discovery starts for ALL assets and investments. Stocks and equities are grossly overvalued. Other promises like underfunded pensions, plus whatever they are invested in [like under performing assets], the light starts to reveal where they really are.

  10. Koos/Jan whatever | March 1, 2016 at 10:12 am | Reply

    @Steve,

    Re

    While Koos is correct that Eligible Gold and possibly Silver may be warranted for delivery for OTC Market private trading purposes, this seems to be a small part of the overall delivery volume.

    EFP volume is 4 % of TOTAL TRADING VOLUME. EFP Volume (of which we don’t know if it increases or decreases the OI) is far greater than delivery volume.

    • Koos,

      Yes, indeed you bring up a good point. So, the question is, does the 4% of EEP trading volume constitute the majority of deliveries, or does it represent the same proportion of deliveries as does the conventional exchange?

      Which brings up another excellent question. Is the majority of Eligible Gold (and silver) held in tight hands as we assume? Of course, we will never know the answer to that as the situation at the Comex Exchange becomes even more opaque.

      steve

      • “…as the situation at the Comex Exchange becomes even more opaque.”

        Yes good point. I think many in the “alternative financial media” are stating this or that will happen…and soon. But that is with the current rules in effect. However if the rules don’t fit the need [financial and PM markets manipulation], change the rules, break the law, whatever.
        This damaged dysfunctional world economy, run by people whose major concerns are power, greed, and control, will not give up without a fight. Kranzler noted in a recent article http://investmentresearchdynamics.com/lets-have-lunch-with-the-mad-hatter/ that “The overnight computerized stock market futures trading systems mysteriously “broke” once again as the futures were heading south”. I know almost nothing about stock futures and many other financial things but I had never heard of this trick. There will be many more I’d guess.

        • Ah, another mention of David Kranzler! I just wish Dave hadn’t been so impatient & mean to Koos with put-down comments. I’ve personally been a longtime happy commenter on Dave’s blog. I feel he adds great value – over & above his unique style – many times reporting new facts for the first time, ahead of anyone else in the community.

          I can think of 1 great person who could moderate between Dave Kranzler & Koos Jansen, to hold a healthy debate about the “COMEX eligible issue”. That person is Craig Hemke (Turd Ferguson), who has hosted both Dave & Koos as guests in the past.

          • That assumes the parties involved are interested in such a debate. I can’t see how that would be of any benefit to them, to use their time in this way.

            And of course any any all discussion [by anyone] won’t change the way the COMEX conducts business. What is fairly certain is they will change the game if necessary to maintain power, control, profit and relevance.

          • Theravaida | March 1, 2016 at 3:34 pm |

            Koos mentioned he’s interested in debating. This is cut-paste of his last comment on Dave’s blog:

            Koos February 29, 2016 at 9:40 am
            I’m hoping for someone to openly respond to my post as well! Would be a healthy debate!

            Given how long Craig has harped about the criminality & irregularity of COMEX, I’m sure he would love to be involved in such conversation. Dave says he has no bandwidth for debate or dialog, other than his claim that Koos misintepreted some COMEX documents. If at all Dave finds bandwidth and feels like reconsidering, then there could be a debate. Crux of such presumed discussion being around the claim by Dave.

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