Interesting Trends Taking Place in the Silver Warehouse Stocks

There have been some interesting movements of silver at the Shanghai and Comex warehouses in the past several months.  Keeping pace with its downward trend, silver continues to be drained out of Shanghai Futures Exchange ever since the April 12th price take-down.

Here we can see that on April 12th, the Shanghai Exchange held a total of 1,123 tonnes of silver in its warehouses:

shanghai Silver Stocks 41213

In an update that I put out on July 9th, the Shanghai silver stocks had declined a whopping 45% in less than three months:

Shanghai Silver Stocks 70913B

Here we can see that the Shanghai silver stocks decreased 509 tonnes from 1,123 tonnes on April 12th to 614 tonnes on July 9th.  However, according to the most recent data, another 105 metric tonnes have been removed in the past month.

Shanghai Silver Stocks 80913B

In just one month, 17% of the silver warehouse stocks have been removed from the Shanghai Futures Exchange.  So, after a 26% decline in the price of silver since April 12th, the Shanghai Exchange has lost 55% of its silver inventories.

Large Silver Movements into JP Morgans Customer Category

While the Shanghai Exchange has seen its silver inventories decline in the past several months, a great deal of silver has been moving into JP Morgans Eligible (customer) vaults in just the past three weeks.

I noticed an interesting trend that starting taking place on July 22nd when 600,000 oz of silver were transferred from Scotia Mocatta’s Registered (dealer) category into JP Morgan’s Eligible.  During that week there were two more large transfers of silver, each about 600,000 from Scotia Mocatta into JP Morgan’s Eligible.

COMEX SILVER 72213B

At the beginning of the week on July 22nd, JP Morgan had 20.3 million oz of silver in its Eligible category and 12.7 million in its Registered, while Scotia had 9.8 million oz of silver in its Registered.  If we look at the Comex Inventories as of Friday, Aug 9th, we can see the change that has taken place even though the overall total inventory has remained about the same at 164 million oz.

COMEX SILVER 80913

First, highlighted in red, JP Morgan’s Registered inventory has fallen 21% from 12.7 million oz down to 10 million, while Scotia Mocatta’s Registered inventory declined 44% from 9.8 million oz to only 5.5 million oz — all in three weeks.

Second, JP Morgan’s Eligible inventory has increased 42% since July 22nd from 20.3 million oz to nearly 29 million (highlighted in yellow) on Friday, August 9th.  There seems to be a serious motivation by futures participants to move Registered silver from several vaults to JP Morgan’s Eligible (customer) inventory.

Third, even though total Comex silver stocks have remained virtually the same in the past three weeks, eight million oz were transferred from the Registered to the Eligible category.  This can been seen in the trend that has taken place over the past year.

COMEX REGISTERED INVENTORIES 80913 B

There is a lot of speculation we can attribute to the strange movements of silver in and out of the registered category, but you will notice that the trend started to take place right after the QE 3 announcement in Sept 2012.

That being said, there is some motivation of the Comex Futures participants to move a great deal of silver into JP Morgan’s Eligible category.  Again, all we can do is speculate why this is taking place.  On the other hand, the Shanghai silver stocks have seen their inventories decline a substantial 55% in the past four months ever since the April 12th silver take-down.

Traders may say these interesting movements of silver are “Just part of what typically occurs in the warehousing business.”  However, we all in the precious metal community realize there is nothing TYPICAL taking place today in the gold and silver markets.

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14 Comments on "Interesting Trends Taking Place in the Silver Warehouse Stocks"

  1. Interesting…I remember back in around 2002 – when I used to watch the warehouse stocks a bit more closely than now – that a 1.5Moz delivery of registered silver leaving the vaults was rare…This might happen once or twice a year, and we always assumed it was going to stock up the LBMA or some such entity. But the point is that that was then and this is now….

    L.

    • Galearis… I agree. The interesting thing that has taken place in the COMEX is the huge transfer of silver from the Registered in 2008 at 90 million oz to the Eligible which was only 50 million oz. The Eligible inventories now stand at 124 million while the Registered are only 40 million.

      steve

      • So is JPM just stackin’ or is this an interim stage of holding off a delivery crisis? Many pundits (me included) speculate that as the system implodes around physical metal shortage, JPM and other banks just end up with all that metal they are receiving in the COMEX. Is this happening at the LBMA too? (Unknown.) The shortages of silver are prevalent at the Shanghai Exchange, so it doesn’t look like it is going there…But it IS going somewhere and so far there is a bottleneck at the JPM vaults and until recently at SLV “vaults”…

        With the paper metals looking frisky again this Monday, I am inclined to think they are going to allow a paper price rally, to keep the sham markets operating as long as possible…Hmmmm, but that will still be less costly in metal deliveries than the alternative of cash market for metal. This will run well into the fall and we will probably double top. Then another intervention or just a shut down of the paper system followed by invisible hypothecations and the flurry of lawsuits. Like the vault off takes of GLD, the draw downs out of SLV will probably provide the timing of the next stage.

        In the end, at the end, we will likely know.
        G.

  2. Steve.

    Thank you very much,for tremendous investigative effort,
    really enjoy it inmensely…

    Shanghai,warehouse movement of silver(disappearence)
    and also the movement into JPM eliglible category are very
    revealing to me…

    COT and BPR(bank participation report) are in my humble
    opinion,obsolete,boring and totally irrelevent in the current
    manipulated market.

    Personally I’ll re-arrange my GSR in favour of silver….

    • luiscarlos… thanks for the kudos. By the way, Silver Miners’ results have been coming in and so far 5 have stated net income losses, while one has reported a gain — which I had a good idea they would. However, there are still 6 more companies to publish results… most next week.

      It looks like there may be 8-10 that will be showing net income losses rather than the 7 that I forecasted. A lot of interesting things going on.

      steve

      • Do you think AG (First Silver Majestic) will report a loss?

        • Steve… SilverCorp Metals already came out with their results and they stated a positive $6.4 million net income for Q2 2013. First Majestic comes out with their results tomorrow and I believe they will be stating a positive net income gain of $8-$12 million depending on several factors.

          First Majestic is actually the LOWEST COST PRODUCER in my group. There are some that state they have a lower cash cost than First Majestic, but that is a bogus metric in my book. Even though a company states a low cash cost does not guarantee profitability.

          steve

  3. gold jewelry industry in shanghai is charged with price fixing. when the price fixing cartel is taken down, gold jewelry sales will definitely increase at a faster pace.

    • judejin… that’a quite interesting. I just read that Chinese Gold Imports are up 54% in the first 6 months of the year compared to 2012… and this is only what is “officially” being reported.

      steve

  4. OutLookingIn | August 12, 2013 at 8:14 am |

    Are the miners about to explode higher? The GDX, HUI and GDXJ, all point to a major turn around last week. Could this be another head fake? Or is this the real deal major bottom? Are these PM vault movements in preparation for the big event? And could that be a major short squeeze? This will be a very interesting week to keep your eye on the miners.

    • Outlookingin… I don’t follow technical analysis, especially in a rigged market, but the silver miners are for the most part unprofitable as a group at $20 silver. So, if there is any more downside, I do see it as being something that will remain for long.

      What an interesting 3 days of precious metal action.

      steve

  5. I understand the COMEX has 5 years worth of future contracts coming due in January and this is apart of the big push to fill those. I don’t believe the physical supply to get it done exist outside of the private metal thats been bought up in the last 5 years. Truth or conjecture?

    • westward… I have heard something to the same degree. However, I do not have inside knowledge to confirm or deny. There is a member here that goes by Adolf, and if he is reading the comments he might be able to shed some light on this issue better than I.

      My focus is more on how energy will impact the precious metals and miners. That being said, I present this information on the warehouse stocks because it seems quite peculiar to me. I believe we are going to see some interesting events unfold here in the not so distant future as it pertains to the warehousing of the precious metals.

      steve

  6. a lot of gold jewelry is carried by foot from HK into China. these are not included in the official numbers. HK’s neighboring province, guangdong, is one of the biggest gold consuming province in china. i’m sure HK’s gold jewelry sales went up double digits this year too.

    in the april smack down, hk residents were complaining that visitors from mainland bought up the entire gold inventory so that the local can’t find anything left. hk’s gold price is usually at least 5% lower than mainland due to lower taxes.

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