Shanghai Exchange Silver Drain Continues While JP Morgan Makes Large Transfer

Since my last update on Aug 11th, silver stocks at the Shanghai Exchange continue to decline.  Furthermore, JP Morgan made a huge transfer of silver on Thursday, Sept 5th from its Registered to its Eligible inventories.

Ever since the April 12th take-down of the precious metals, the silver stocks at the Shanghai Exchange have fallen considerably.  On April 12th, there were 1,123 tonnes of silver at the Shanghai Exchange.  By Aug. 9th, this had fallen to only 509 tonnes — a 55% decline in less than four months:

Shanghai Silver Stocks 80913B

Furthermore, we can see that in less than one month, an additional 50 tonnes have been removed from the exchange:

Shanghai Silver 90613

So, in less than five months, nearly 60% of the silver has been drained from the Shanghai Exchange.  Some analysts have stated that during declining silver prices, its normal for silver to be drained from the metals exchange.  However, since Aug. 9th, the price of silver has risen from the $19 range to over $24 presently… but the silver inventory continues to decline.

As I have mentioned before, it seems quite odd that the silver inventories in the East are falling while those at the Comex in the West have remained virtually the same.

That being said, while the overall Comex silver inventories are still at the same level they were five months ago, there has been an interesting transfer and build of silver at JP Morgan’s Eligible (customer) inventories.

Comex Silver 90513

Here we can see that JP Morgan transferred 1,437,887 ounces of silver from its Registered (dealer) to its Eligible (customer) inventory.  Including this last transfer as well as 3-4 others from Scotia Mocatta during the week of July 22nd, JP Morgan increased its Eligible Silver inventories (50%) from 20.2 mil. oz to 30.2 in six weeks.

One of the members of the blog stated that part of JP Morgan’s Eligible inventories is storing some of the different Silver ETF’s bullion.  I don’t know how much of the ETF silver they are storing, but we can see that there has been a motivated effort by the part of JP Morgan to increase its Eligible silver inventories.

Lastly, there are some very interesting trends taking place in the U.S. Silver Import-Export market that I will be writing about in the next several weeks at the SRSrocco Report.

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14 Comments on "Shanghai Exchange Silver Drain Continues While JP Morgan Makes Large Transfer"

  1. Interesting stuff, SRS, thanks.
    But, please clear something up for me. I’ve been trying to get a hold of the comex reporting and I finally got myself to distinguish registered from eligible by thinking of registered as ready to go. The power of alliteration. Registered is ready to go. Registered category silver and gold can be delivered immediately while eligible silver and gold is up to comex standards but not officially available for immediate delivery.

    But you’re further distinguishing that eligible silver and gold is customer accounts. Is that always the case?

    • Fred… from what I understand, the metal stored in the ELIGIBLE CATEGORY is owned by an individual or group. This metal is not available for delivery to the market. Basically, the eligible is owned by the customer.

      Now, the REGISTERED CATEGORY is the metal that is available for delivery and may indeed be owned by the bullion banks themselves. That is why they call this the DEALER category.

      That being said, some have stated that these different categories don’t mean much any more, due to the fact that there probably has been a great deal of manipulation and leasing of this metal.

      The one thing that is important, in the past five years the Registered inventories have fallen from over 100 million ounces down to 40+/-. That 60 million ounces was transferred to the Eligible category.

      Regardless of the leasing and manipulation… this means that more silver is held by investors and less is available for the market.


  2. one thing the gold/silver community has neglected is that while the value of russian and chinese UST holdings have been steady and risen a little since 2008, how much of the rise in value is attributable to the drop in the interest rate and how much is due to actual rise in notional holding(new buying plus old roll-over).

    i bet that most of the rise is due to the drop of the interest rate.

    • What rise in value are you referring to? haven’t treasury yields doubled in the last few weeks while the value for those holding them decreased?. maybe this is why China is not dumping them faster than they are, they don’t want to see yield spike up too fast.

      • i know the yield has been rising for the last 6 months. but it is still below where it was in ’09 or ’10

        we need to take into account of the yield fluctuation to get an accurate picture of what china and russia are actually doing with UST.

        • lastmanstanding | September 8, 2013 at 8:23 am | Reply

          They are using ust to get tangible items into their possession.

          I don’t think that I need to elaborate anymore than that.

          • I can’t believe that.
            China has 3 trillion UST. what tangibles do they want? gold? silver? well drop 1% of that on the physical market and see what happens.

            Products, they produce EVERYTHING. Companies… sure invest/buy foreign companies so we can tax their profits, and nationalize it in the end.
            Housing lol… well they are going to be in for one hell of a surprise. They rely on cheap exports, that’s it. The game the west has played has been played for centuries, now they want in, it’s not going to work.

            So please do elaborate on tangibles that they are investing in.

            For all of you China believers out there, thinking that they will come out on top.
            They are going to get SMOKED.

            All what you have are the rich chinese exporting their corrupt money out of the country to live outside of a country that is degrading at a very high rate.

            Get what you can and get out. Simple as that.

            They are not in it for THEIR countrymen.

          • lastmanstanding | September 8, 2013 at 7:51 pm |

            John Q. They are buying up real estate here in the US at an alarming rate with just plain US paper dollars from selling just the crap that you were talking about above.

            China has no clean water…why do you think that the Detroit area is so attractive to them. Clue…there are 5 of them.

            In fact, why are the Japanese still in the fucking game? Their debt is so insurmountable that they are nearly done. (if fukashima doesn’t get them first)
            But didn’t their huge corps years ago purchase some of the most valuble property that the US had not to mention weasel into our country and set up shop…all with govt blessing.

            Want some more speculation?…If you were the Chins, wouldn’t you want more than the “full faith and credit of the US govt” when lending 100’s of billions of your debt-free money?

            You can bet your ass that our govt gave those fuckers/bankers the paper to our national parks and forests to buy time for the nw bs that they want to implement.

            I wish nothing bad on the Chinese people or the japanese, nor any other that has been hosed by this vile system.

            Let’s smoke the bankers.

  3. Fluctuation? One can only hope, but its looking more like a trend that nobody wants to purchase anymore except for the Fed

  4. most chinese are not aware of how bad the situation is in the USA. they still believe USA is no. 1 nation on earth in most measures.

    • lastmanstanding | September 8, 2013 at 9:11 pm | Reply

      …and most citizens of the USA have no idea how bad the sitch is here…

      They still believe we are the no.1 nation on the earth…and that’s why they are called sheeple.

      I am over 50, bought into the lie that thank God I woke up from 5 years ago and am sad to say that I am so ashamed of my country.

      Thank God that Moochell and I have nothing in common…other than we want each other gone.

  5. While I’m certainly no expert on warehouses that store precious metals for the Comex, this is how I understand it….

    If you use a private vault for storage of PMs, it can be stored as allocated or unallocated. As allocated, you know the serial numbers of the bars. As unallocated, you don’t know the serial numbers. Unallocated, you must have purchased your PMs being stored through a dealer, and the storage charges are less and your metal is simply part of a “pool” of that category of metal. Allocated, you get back what you put in — whether coins, or small bars that you may have owned yourself for a long time, or purchased and put into the vault directly from a dealer. For all the private vault knows, what you put into allocated could be junk metal with gold or silver paint, as no assay is performed. With unallocated no assay is performed either, but the source is documented. BTW, some private vaults around the country have recently switched to the Allocated category only.

    The Comex PMs are not assayed, but the metal comes from a documented chain of custody. These metals are always unallocated, and must have originally come from “trusted” refiners. If a 1,000 TOz silver bar (almost never exactly that weight) leaves the system as a delivery to a “stopper” (someone who takes delivery of a contract), and is removed from one of the Comex approved vaults, it must be assayed before it can be deposited back into that system.

    Any PM bar in the Comex system is in “good delivery” form, and each bar has a certificate and a “warrant.” Eligible means that the bar is being stored for a customer (bank or individual, or some entity) and is not presently for sale. That certificate has an attached warrant. Registered bars have had the warrant removed and filed separately from the certificate into the Registered category and that bar can be delivered by the vault to a stopper (a long taking delivery) — IF the entity that owns the bar is a “short” for that delivery month and his bar is being called upon to be delivered to the stopper. For example: John’s Registered silver CANNOT be used to satisfy Julie’s delivery notice.

    Of course, a Comex silver contract is for five 1,000 TOz bars. Any entity that has been called upon for delivery of a contract must have five bars in the Registered category by the end of that contract month. It is up to the entity making delivery to decide what day of the contract month that he/she will make actual delivery. That decision is not up to the stopper.

    Ordinarily, an entity that is naked short will buy back his short before his contract can be called upon for delivery to a stopper.

    Any entity can be a customer (holding bars in the Eligible category), a dealer (holding bars in the Registered category), or both (holding bars in Eligible AND Registered categories). One only needs to supply the vault with the proper paperwork to re-attach or detach the corresponding warrant(s) from his certificate(s).

    IMHO, and I have no facts to back this up, is it possible that only silver bars that have their warrant attached to the certificate can be leased out? Bullion banks exist because of hypothecation, re-hypothecation, and hyper-hypothecation (fractional reserve banking). I believe it is true that the majority of vaults that are approved by the COMEX are owned by bullion banks. Are these vaults hypothecating silver from unrelated Eligible silver owners? These vaults claim a detailed record of ownership of each silver bar in the Comex system. Has anyone actually seen these records? If “certain” transactions in these records are not recorded, since the vault itself has control of the records, how would anyone possible know if a record is complete? Is this the reason for the recent Comex disclaimer on their website?

    JP Morgan is custodian of the silver in SLV. I do not personally believe that SLV has much physical silver that hasn’t been hypothecated. If an ounce of silver can be hypothecated once, it can be re-hypothecated a thousand times.

    An Eligible category silver holder’s only defense may be to convert his holdings to Registered. The Comex does not have DRS!

    Sorry this got so long……

  6. Some of these comments are right on, but the ones that use foul language are trash in my book.
    When a man has to resort to that kind of talk, it means that he is limited in his vocabulary and therefore, shows his ignorance.

  7. The Edge of Chaos | September 19, 2013 at 7:43 am | Reply

    Well Joe I might generally agree…but in these days and times it hard not to let a “fuckers” slip out when discussing our leadership. Kinda helps cleanse the soul !! ; )

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