INDIA vs COMEX: Physical Silver Demand Will Destroy Paper Rigged Markets

If there’s one chart silver investors need to see, it’s the INDIA vs COMEX chart.  This chart puts into perspective just how little Registered silver remains at the Comex warehouses.  In addition, Comex Registered silver inventories continue to fall as two large transfers were reported over the past two days.

As reported by many precious metal websites, India continues to import record amounts of silver.  According to Koos Jansen’s article at Bullionstar.com, India Precious Metals Import Explosive – August Gold 126t, Silver 1,400t:

When the Indian government raised the import duty on gold in 2013, it simultaneously raised the import duty on silver to 10 %. However, the premium on silver didn’t reach 25 % like gold. Many people switched to purchase silver instead of gold. Import since 2013 has increased dramatically.

Last May India imported a record 1,542 tonnes of silver, in August an estimated 1,400 tonnes was shipped in, which would be the second highest number on record – my record goes back to 2008.

Koos states initial trade data shows that India has imported 1,400 metric tons (mt) of silver in August.  While this is lower than May’s 1,542 mt, it is the second highest on record.  Now, what Koos didn’t mention is that analysts forecasted Indian silver imports would decline in 2015 due to easing of some gold restrictions.  This was reported in the May ETF Securities Precious Metal Monthly Report:

With the election of Mr. Modi and some easing of the gold restrictions, silver use in India was generally expected to decline in 2015. But this has not been the case, as of the end of May. The latest data through April show India silver imports running about 30% above the 2014 record pace, on track for about 300 mn ounces of imports in 2015.

Now, data in that report is several months old.  In their recently released August Report, ETF Securities forecasts Indian silver imports to reach 340 million oz (Moz) or 10,500 mt.  Not only is that a lot of silver, it will consume 40% of global mine supply.  Why is this such a big deal?

India Overtakes The United States As World’s Largest Silver Importer

Well, if we look at CHART #44 from my THE SILVER CHART REPORT, we can see just how much India’s silver imports have exploded recently compared to previous years:

U.S. & India Silver Imports 2007-2014 Moz

This chart represents the two largest silver importers in the world.  As you can see, the United States consistently imported more silver than India.  Annual U.S. silver imports varied between 150-200 Moz, while India’s silver imports were more volatile.

During the 2008 financial crisis, India’s silver imports surged to 175 Moz compared to 80 Moz during the previous year.  After falling to a low of 41 Moz in 2009, India silver imports doubled to 83 Moz in 2010 and surged to 149 Moz as the silver price spiked to $50.

However, silver imports shrank considerably to 63 Moz in 2012 as Indian investors held back on purchases due to the lack of price direction in the silver market.  In addition, many Indian investors decided to take some profits and became net sellers of silver bullion in the market.

Well, this all turned on a dime in 2013 (during two major silver price take-downs) as Indian silver imports jumped to 197 Moz in 2013 and even higher in 2014 to 228 Moz.  If current silver import trends continue in both the U.S and India, this is will be the year-end result for 2015:

U.S.-&-India-Silver-Imports-vs-World-Mine-Supply

The United States and India are on track to import a massive 533 Moz, 63% of the forecasted 850 Moz of global mine supply.  If India does import 320-340 Moz in 2015, its eight times more than their total imports in 2009 (41 Moz) and nearly five times what they imported in 2012 (68 Moz).

The reason U.S. silver imports have been the highest in the world and more consistent is due its large industrial demand base.  India’s silver imports are more volatile as silver bar investment demand is the leading factor–it rises and falls due to price and market sentiment.

INDIA vs COMEX Registered Silver Inventories

Okay, here is the chart I mentioned in the beginning of the article.  As stated above, India’s silver imports were 1,400 mt in August.  If we compare India’s silver imports for just one month, they surpassed the total remaining Registered silver inventories at the Comex:

India-Aug-Silver-Imports-vs-Registered-Silver-Inventories

If we go by the Comex Registered silver inventory update as of yesterday (Wednesday), it held 44.3 Moz in its warehouses… this translates to 1,385 mt.  Again, in just the month of August, India imported more silver (1,400 mt) than the total remaining Registered silver inventories (1,385 mt) at the Comex.

What is even more significant is the continued drain of Registered silver inventories at the Comex.  We must remember, only Registered silver inventories are available for delivery into the market.  Let’s take a look at the last two Comex silver warehouse inventory updates:

COMEX-SILVER-093015

COMEX Silver 100115

In the past two days, a net 2 Moz of silver were removed from total silver warehouse stocks at the Comex, while registered silver inventories declined to a low of 43.7 Moz for the year. 

Investors need to realize the continued drain of Registered silver inventories at the Comex is due to increased investment demand mainly from North America and India.  I am republishing this chart from a previous article because it shows just how fast silver is being withdrawn from the Registered silver inventories:

RATE-OF-CHANGE-Comex-Registered-Silver-Inventories

When the price of silver skyrocketed to $49 in 2011, Comex Registered inventories declined from 56 Moz in March 2010 to a low of 26.7 Moz in July 2011.  Thus, the average monthly decline of Registered silver inventories was 1.8 Moz.  Now, compare that to the present trend, but let’s update the data.

As we can see, the chart shows 50.4 Moz.  However, the Registered silver inventories are now at 43.7 Moz.  Which means, the present trend shows an average decline of 5.3 Moz a month.  This is nearly three times greater than the 2010-2011 trend.  This should wake up investors to the fact that… SOMETHING IS SERIOUSLY WRONG in the market.

Clowns & Mainstream Media Nitwits Continue To Put Out Rubbish On The Silver Market

A reader left this comment in my recent article:

”US Mint American Eagle silver coin sales in September fall 23% to 3.8 million oz”… posted 9/30/15 @ 10:09:26 FXWire Commodities

I did a Google search and found out it came from NetDania.com.  It was one of their FXWire Pro Commodity feeds.  I guess some poor uninformed slob behind a computer saw that Silver Eagle sales in September were only 3.8 Moz compared to 4.9 Moz in August.  So, in their feeble-minded way, they wanted to show that Silver Eagle sales had fallen even though there was all this hype of product shortages.

Unfortunately, the nitwit who put out that feed didn’t take the time to find out that the U.S. Mint lowered their weekly allocation of Silver Eagles to their Authorized Dealers to 750,000 for several weeks in the month.  It’s really hard for Silver Eagles sales in September to surpass August sales when the U.S. Mint puts a cap on output and deliveries.

Furthermore, several analysts continue to state that this is “Not a silver shortage… it’s a product shortage.”  While it’s true this is not a wholesale silver shortage, investors better not wait until it is.  I would imagine we will continue to see analysts say, “this is not a real silver shortage”, right up until the point the wholesale market freezes up and the mints are no longer able to acquire metal to make products.

When this occurs, analysts can slap themselves on the back bragging how they finally made the right call on the real wholesale silver shortage.  Unfortunately, this will also come at the time when more investors than ever want to buy silver.

There lies the rub.

At some point, the physical silver demand will totally overrun the highly leveraged paper (manipulated) markets.  I would imagine India could be one of the leading factors…. but so will North American investors as more and more new buyers come into the market taking an even larger piece of a shrinking silver pie.

Lastly, as many of you realize, I continue to promote my SILVER CHART REPORT in many of my articles.  While this may seem like a bit of overkill to my regular readers, I still get new interested buyers.  So, I do it to provide an opportunity for those who are new to the site to be able to check it out… which were over 50,000 last month.

That being said, I will be doing this much less in future articles until I release my next report… which I am still in the writing stage.

————————————-

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SIlver Chart Cover Graphic 3D shadowMost analysts focus on a certain area or sector of the silver market. However, the information in this report illuminates a holistic view of many sectors of the silver industry, capturing the relationships that connect many parts of the market.

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23 Comments on "INDIA vs COMEX: Physical Silver Demand Will Destroy Paper Rigged Markets"

  1. “Now, what Koos didn’t mention is that analysts forecasted Indian silver imports would decline in 2015 due to easing of some gold restrictions. ”

    And we all had to know at the time that this was a complete fabrication. Men have been trying to defy the laws of economics (and physics for that matter) for centuries to no avail!

    Almost like saying that physical silver purchases will drop in the US as the price is suppressed…DOH!

  2. APMEX premiums on Eagles (monster box) dropped again to $4.99. They have gone from 5.49, 5.19, and now 4.99. The long PSLV and short Eagles strategy is paying off and will continue to pay off until premiums are back to 2.25 as they were on SD bullion for months. This strategy has made money every single time since 2008 whether the market is going up or down. The reason it works is because the physical silver investor neurosis has no bounds. They will simply pay any price when they want their coins.

    All the excellent reasons for owning physical are still valid, but you are getting taken to the cleaners if you buy it at a time like this. You want to own physical but you are a fool if you assume it is appropriate to acquire it like a child and seek immediate gratification at any price.

    Mike

    • Mike,

      Yes, again… in the short-term you are correct. But, let me repeat myself one more time. Wealthy folks who like Silver Eagles don’t care about the price at this time. At some point that arbitrage will no longer work as investors will not be able to acquire any sort of retail product.

      To become complacent may turn out to be one HELL OF A LOUSY INVESTMENT STRATEGY.

      So, the NUTS & BOLTS of it all is this…. the arbitrage will continue to work until the DAY IT DOESN’T. We have no idea when the next Lehman Brothers event comes. However, it will come overnight. I don’t believe investors are being taken to the cleaners. They don’t care about a few bucks.

      Actually, its peanuts compared to the upcoming collapse of the U.S. Bond and Stock markets. It’s all in ones perspective Mike.

      steve

    • “You want to own physical but you are a fool if you assume it is appropriate to acquire it like a child and seek immediate gratification at any price.”

      IMO smarter to buy a lower premium coin or round than an ASE, but at least they are acquiring the physical at a low overall price. And if they want to sell later they will sell to someone who also is willing to pay high premiums. Yes for a while premiums may drop to $4 or so.

      • “And if they want to sell later they will sell to someone who also is willing to pay high premiums.”

        That’s ridiculous. These high premiums will not be retained with your coin. Simply look at the historical data and apply some simple statistical math. If you think the 25% premium will carry with the coin then you are betting that manufacturing costs will rise much faster than the price of silver. That just is not going to happen. It costs $2 plus the silver cost to make an eagle whether silver is $10 or $100. You won’t be paying a $25 premium on Eagles when silver is $100.

        Since 2008 I have been following silver very closely, including the propaganda from the silver retailers. The level of delusional thinking has been getting more extreme as each year passes. Physical silver is a great investment right now, but you must actually acquire an appropriate amount of silver in exchange for your other assets. This thinking that it’s ok to receive 25% less so that the dealers can retain 25% of your assets is simply off the charts moronic. I have literally seen a number of youtubers present as fact that it does not matter how much paper currency you had to give up for a box of silver. They indicate it is a good deal at any price. It is not!

        If $5 is a fair premium for you guys, then how about $10? Ill be happy to sell you all you want at $10 and you can sleep well at night knowing the premium did not matter. 🙂

        These high premiums are TEMPORARY. If you haven’t bought silver yet then I feel your pain. If you want to buy more then you may need to let Sprott hedge your bet until premiums come down.

        Mike

        • Buyers always pay higher premiums for ASE’s than any other silver coin in the U.S. Yes they may eat $1 or $2 premium per coin if they sell. Big deal. They have silver in hand, And, why do you care so much what someone else pays? Why does it get you so upset? So you are buying smarter with lower premiums. Me too. Good for us.That doesn’t mean someone is a dumbass just because they decide to pay more than you or I find acceptable.

          And only time will tell how temporary these premiums are on ASE’s. Will the premiums come down by at least a dollar on 2016 ASE’s? Almost certainly. Will the premium come down $2 or more? Far less certain.

  3. I think it makes more sense to pay attention to the buy/sell spread than the premium. Say I pay $3 over spot for ASE and can sell them back for $2 over spot. You pay $1.25 over spot for generic rounds and can sell them back at spot. In the long-term, it probably doesn’t matter much, but in the short term, my ASE’s were the better value. Also, the premium on Silver Eagles will often increase over time (just look on Ebay at older ASEs), while the premium on rounds is likely to remain the same. Lastly, in a crisis/barter type of situation, it will be much easier to trade Eagles for items that you need, than to find people that will accept a generic round that they aren’t familiar with. My two cents anyway.

    • “I think it makes more sense to pay attention to the buy/sell spread than the premium.”

      The buy/sell spread at APMEX on Eagles is the highest I have seen it since 2009.

      “the premium on Silver Eagles will often increase over time.”

      For several months earlier this year SD billion was selling Eagles for $2.25 over spot with free shipping, even in quantities smaller than 500 ounces. That’s about the lowest we’ve seen since 2009.

      There are so many silly “facts” passed around regarding silver that are not supported by evidence. Here are the best reasons to own silver: 1) No counterparty risk, 2) No taxes levied while you hold it, 3) Zero or minimal carry costs, 4) Protection against inevitable expansion of the monetary base, 5) It’s cheap right now. We are in the depths of a large correction and the current demand for bars and coins is very reminiscent of 2008/2009.

      Some people like to argue that the last point is untrue, but I think that is because metal prices can be volatile. Over a long time period the metals clearly protect you from central banks that continue to create more currency units.

      Mike

      • That may be true this moment, but not always. I often found narrower spreads on Eagles vs other types of silver coins. Only pointing out that lower premium does not always mean it is the better deal or better value.

  4. silverfreaky | October 3, 2015 at 7:16 am |

    @Mike.Right!In the moment nothings speaks against physical silver.

  5. OutLookingIn | October 3, 2015 at 9:46 pm |

    Inflation.
    The $370,000 that Andy stole from the warden in 1966, depicted in the movie “Shawshank Redemption”, adjusted for inflation to 2015 is the equivalent of $2,755,846.56 today.

    Imagine if he had bought gold or silver in 1966 with that $370,000?

    Or, imagine if he took that $370,000 and stuffed it in a mattress?

    DO NOT rely upon paper currency to protect your wealth. Own and hold physical gold and/or silver.

  6. Silvrwillwin | October 4, 2015 at 9:16 am |

    Many have tried to predict outcomes regarding gold and silver prices time and again. The exact timing of a major g&s price spike will have to be on a “remains to be seen” basis.
    Facts along the way though helps in giving a pretty good idea that things are in fact moving along to the point by which there is a light at the end of the tunnel.
    Some of the physical silver facts that have taken place –
    * Pilgrims society actions crushing the price of all silver by overall control http://www.silver-investor.com/charlessavoie/cs_may05_pilgrims.htm
    * Hunt brothers , during their procedure while taking control and ownership of world supply of physical above ground silver , they almost pulled it off, it was officially reported as such.
    * The gross manipulative handling of a phony price given to silver by the powers that be . This has been performed from the 70’s thru present day. It’s so obvious that it’s ridiculous and pathetic.
    * As a result of such a pounding down of price the miners of the physical are beginning to shut down.
    * India has been loading up with huge amounts of physical silver , all the while removing allot of it from the U.S. .
    * SAE’s have had production halts of late.
    * The derivative mountain is starting to cave ( Glencore ).
    * +++
    The evidence is surmounting to the point where predictions aren’t even needed anymore for the sensationalism that it breeds.
    Just like dominoes each block that is knocked over is bigger than the previous one.
    If things go as predicted , the amount of time between each showing of the truth will be within a shorter gap .
    Enjoy the event that’s under way , it may just turn out to be the greatest show on earth !

    • Silvrwillwin | October 4, 2015 at 3:33 pm |

      I said ” If things go as predicted , the amount of time between each showing of the truth will be within a shorter gap . ”

      What I meant to say was If things go by the surmounting evidence that has been realized and collected up to this moment in time then the proof overall should side with the physical dictating a more realistic price. Certainly money investments as a whole worldwide are tottering on disaster in grand proportions.We haven’t arrived there yet but there is enough that has gone on to prove something big is coming. Why hasn’t it gone to physical gold and silver sooner ? Perhaps because the United States is so rich in assets as a result of so many decades of being number one in the world. Thus TPTB can keep going with the smoke and mirrors , all the while diverting the cliff edge that so many will cascade off one day.
      I like to look at holding some physical as that of fire insurance for my house. You can’t buy it at the time when and if your house is in flames.

  7. Just give me an accurate prediction when this so called $100.00 dollar oz. of silver is supposed to go up.

    Then I will cash in 2/3rds of my cache and pay off the mortgage and buy some survival goodies for my kids. Then build a survival shelter….up Armour….

  8. Armand Ruckli | October 4, 2015 at 1:32 pm |

    One doesn’t really know what to believe. How many times we heard that silver supply is short. How many times we have been told that the CRIMEX, the LBMA (Lousy Betraying Masters Assoc.) or the Shanghai exchange are horribly short physical metal. One famous guy out of the PM scene openly forecasted the blow up of one or more of these exchanges by the end of 2014. What happend? They just refilled their inventory when they were nearly sold out and apparently they had no problem in doing so. Now we are approaching the end of 2015 and nothing significantly happend to end the price suppression. 2015.75 was a huge hype and the world goes on as ususal. None of the things forecasted happend so far. So, to me it looks quite much like kind of a propoganda. A propaganda that might be in contrast to that delivered by the mainstream media, but even so it’s still propaganda. Who is taking advantage of that? PM dealers are most suspect of having an interest in keeping the people in panic mode just in order to keep their sales up.
    To constantly call for the end of the world doesn’t add credibility especially if the end of the world doesn’t materialize.

    • Most every “expert” must get washed out for a bottom to be in. Bottoms in markets do not happen when all the “experts” on the way up still retain their followers. We are about there. All the usual suspects you see interviewed over and over again are to the point of simply repeating the same thing they said last year and the year before. People are losing faith.

      The biggest scam has been putting FAR too much focus on the COMEX. There will be no delivery default that brings down the COMEX. It will not happen. Industrial silver users, with few exceptions, are not getting their silver from the COMEX. I clearly see the manipulation in gold. Fed chairmen have spoken about it for decades. But it will not end with a Big Bang that causes the COMEX to be exposed overnight as a lie. That won’t happen.

      One benchmark for this loss of faith is the silver doctors user messages. They make fun of more posted articles than ever before. People just aren’t believing the crap like they used to.

      So I believe we are close. I don’t have a date but it’s somewhere close.

      Mike

      • To me it’s a matter of doing what’s right. If you hold fiat currency you’re basically valuing it. If you hold PMs you are valuing them. I’m not forced by mandatory laws to use PMs, but I am forced to use fiat… So it’s more a matter of honor than investing, in my case. I like being able to keep my word, and if you translate it into economics, PMs speak truth, while fiat lies. What do you chose?

        You might reply: But you’re going to get lose money holding PMs and so on…

        So what? Most of times, doing what’s right has more negative consequences than good, isn’t it true?

        • “Doing what’s right” is just s cliche. A suicide bomber believes he is “doing what’s right” too, but that doesn’t make them right. It’s a phrase used to motivate once a path has already been chosen. I don’t need motivation I just need understanding.

          Holding fiat is perfectly reasonsble. It has value. Don’t believe me? Just take some to your local Ferrari dealer and see how much fun you can have with your new car. That paper had real value in that transaction.

          its not a religion. It’s just assets. You want to hold the asset that are valued by others (not yourself) in the future and are also unlikely to be taken from you. Silver meets those requirements in my opinion. Your next step is to acquire some (or more) and you don’t want to go about that by first assuming your paper is worthless. If you do you’re gonna get a lot less silver than you could otherwise.

          Mike

        • Silvrwillwin | October 4, 2015 at 8:36 pm |

          Bonifaci, You said ” I’m not forced by mandatory laws to use PMs, but I am forced to use fiat… So it’s more a matter of honor than investing, in my case. ”

          To that I agree – Precisely !!! What is that fiat (currency) otherwise known as? It’s a debt note !

          Every single dollar bill represents a debt system which we are all tied to. A system which is designed to pull all of us down while the owners – the real owners of those pieces of paper benefit off of our debt load that they create directly or indirectly. It was created back in 1913 and passed through congress when most members were on holiday break. They did this so that there would be no problem sailing it through by minority vote. It worked , as a result we the people got screwed and president Truman himself admitted to making a big mistake by letting it happen.

          Physical gold and silver owe nothing to anyone , pure and simple ! That is precisely why when the debt system that has it’s tentacles around our necks is finally cut off during the reset period , we should never take another currency or electronic system back as security offered by a central banker , government branch , federal reserve type set up , ever again. We should have followed Thomas Jefferson’s advice by keeping the central bankers out of this country all together…the likes of the Rothchilds , Rockefellers , Morgans , etc. .

  9. Silver eagle premiums (monster box) just dropped to $4.59 at apmex. Right on schedule and just as an said they would. They have reliably gone like this: 5.49, 5.19, 4.99, 4.59. Anyone who went long SLV or PSLV and short Eagles like I said is making more money then the people who bought Eagles.

    The next stop for eagle premiums is DOWN, not up. We have seen this play out is way over and over and over again.

    Mike

    • Mike, how exactly does one go short Silver Eagles without actually selling them? Since there is a spread between the buy and sell price by which coin dealers profit and meet expenses with, the sell and then rebuy Eagles transactions round trip will greatly reduce the profitability of your strategy. Doesn’t this largely negate the benefit of your long PSLV/short Silver Eagles strategy?

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