UPDATE: Shanghai Silver Warehouse Stocks Fall 24% In One Week

While the Comex utilizes highly leveraged paper contracts to control the price of silver, physical metal continues to be drained out of the Shanghai Futures Exchange.  In just one week, total inventory declined by 24%.

As I mentioned in a earlier article, the Comex is more of a paper trading exchange in which the majority of contracts are settled in cash.  However, the opposite is the case with the Shanghai Futures Exchange as the majority of contracts are settled with physical metal.

At the beginning of August, there were 148 metric tons of silver on warrant at the Shanghai Futures Exchange.  In just three weeks, 29% of the total inventory was removed.  The majority of this decline took place last week when 22 metric tons were withdrawn on Friday alone.

Shanghai Silver Stocks JUL-AUG 2014 NEW

Also, we can see that since the beginning of July, 131 metric tons, or 56% of total silver stocks were removed from the Shanghai Futures Exchange.  At this trend, it would only take a few more months to totally wipe out the remaining inventory.

I’ve received emails from some of my readers asking me “What does the continued draw-down of silver at the Shanghai Futures Exchange mean?”  Unfortunately, I don’t trade silver in the futures markets, so I don’t really understand the dynamics behind the Asian markets.

So, I recently contacted Turd at TFmetalsReport to see if he might forward my inquiry to London precious metal trader, Andrew Maquire.  As many of you all know, Andrew was one of the key players who assisted two JP Morgan whistle blowers to contact Bart Chilton at the CFTC about silver manipulation.

Nothing really came of the silver investigation, but that is no surprise.  Regardless, it would be interesting to see what he has to say about the continued removal of physical silver from the Shanghai Futures Exchange.  If, I receive a reply, I will publish it in an update.


Lately, I have noticed on my site and elsewhere there is an increasing percentage of DISILLUSIONED precious metals investors.  While I can empathize with investors being frustrated that the price of silver has gone nowhere but lower over the past several years…. it doesn’t mean silver is a lousy investment.

I purchased my first ounce of silver at $4.52 an ounce back in 2002.  That price is nearly 5 times less than the current price.  Of course the prices of everything increased since 2002, such as the price of a barrel of Brent sweet crude oil which was only $25.

Brent crude is currently trading at $102 a barrel.  Which means it’s now 4 times higher than its 2002 price of $25.  If you bought silver in 2002, you protected yourself from the ravages of inflation as well as the collapse in the value of the U.S.Dollar.

In 2002, the U.S. Dollar Index reached 120… today it’s trading at 82.  I don’t know when the Dollar finally crashes… but that time is approaching.  The Fed and U.S. Treasury can still prop up that DEAD worthless piece of fiat currency, but a LIE doesn’t last forever.

We must remember… ALL FIAT CURRENCIES ARE LIES that dry up and blow away in the end.

Lastly, some analysts say they have a CRYSTAL BALL as to the time and place when the precious metals will return to new highs.  Maybe they do, however I believe it’s impossible to forecast short-term moves in the metals when the markets are totally rigged.

Which is why I FOCUS on the FUNDAMENTALS.  Investors need to realize that ENERGY is the driver of the economy, not finance.  Furthermore, a growing energy supply allows the global reserve fiat currency, the U.S. Dollar to survive.  So, if you follow that line of reasoning, then this is also true:

CHEAP OIL giveth the DOLLAR Life, and EXPENSIVE OIL will taketh away.

Which is also why we are seeing a great deal of geopolitical events in oil rich countries.  If ISIS is able to spread its control into Saudi Arabia… the DEATH OF THE DOLLAR comes much sooner than later.

This is the reason I include energy analysis on this site.  I am trying to get it through the THICK SKULLS of the precious metal community that ENERGY is the key to the future value of gold and silver.  Unfortunately, many of the precious metal folks are too wrapped up in gold and silver manipulation that they are blind to the real fundamentals taking place elsewhere.

When the world realizes GLOBAL PEAK OIL is here, valuations of most stocks, bonds and other assorted paper garbage assets will plummet.  Why?  Because it takes a growing energy supply to power economic growth that gives future value to paper assets.  When the global oil supply peaks and declines, valuations go down the toilet.

If you haven’t read my article, THE UNKNOWN FACTOR:  How the Global Financial System Will Collapse, I recommend you do so.  There is a short presentation by Roger Boyd who explains the Co-Dependent role of Energy & Finance.  When one goes down, so does the other.

You cannot value gold or silver to its present cost of production.  It is only useful as a tool to provide a base price in a highly manipulated paper market.  The huge rise in the future value of gold and silver will be due to the collapse in value of paper assets… not the rise in the cost of production.

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45 Comments on "UPDATE: Shanghai Silver Warehouse Stocks Fall 24% In One Week"

  1. Nigel Ashton | August 25, 2014 at 12:37 pm |

    Peak Oil is now an irrelevance IF the following is true:


    In brief, magneto-hydrodynamics can take the high velocity plasma which is created and turn it directly into current, or the light emission from the reaction can be captured using solar panels, again resulting in electrical output. Their figures indicate 2 order of magnitude reduction in electrical generating costs to the nearest cheapest source.

    This looks highly disruptive, deeply deflationary and solves the energy crisis permanently.

    I would appreciate your comments on the above technology and the hydrino-economy which appears ready for an imminent roll out.

    Many thanks, Nigel

    PS IMO PV production and hence silver demand will explode.

    • Nigel,

      Thanks for posting that material. I haven’t been able to watch the video on the BlackLight Power yet, but I can tell you the infrastructure of the world runs on OIL. There are many supposed SILVER BULLET technologies that at face value seem quite impressive, but if we look at how they fit into the current infrastructure… they don’t really work.

      Furthermore, it takes liquid OIL burning machines to extract the raw material to make these supposed TECHNOLOGIES that will save us.

      I am not against new ways and technologies to solve problems, but when we factor in the TOTAL EROI- Energy Returned On Invested of using more technology to solve problems of technology, its a LOSE-LOSE BATTLE.

      The more advanced and complex the technology, the lower the EROI of the system.


      • Nigel Ashton | August 25, 2014 at 3:05 pm |

        Steve – thanks for the reply.

        If you can find the time to watch some of their videos you will quickly see that we are at the cusp of another paradigm shift, this one relating to our energy supply.

        These units are compact, suitable for all forms of transports, almost every application that needs power, can run through the grid and can free us from it. The fuel is ubiquitous and free – water.

        I’ve worked in the Oil & Gas Sector and Peak Oil is a reality. However, this is a game changer and I believe it will impact your thesis considerably.

        • GermanReader | August 25, 2014 at 3:47 pm |

          If something sound to good to be true, then its often not true. My impression from the first look over it – I don’t buy it.


          • Nigel Ashton | August 25, 2014 at 4:53 pm |


          • Right, do your own research! This is mine:

            The physical markets always fix the price. We could see that in 2011. JPM and so on could not afford push the prices lower, that would have led to a short squeeze. But what people do now is, they SELL their investments in gold and silver, demand nearly zero. You can see that at all coin dealers in Germany, they offer at the lowest prices a lot of “various years”.

            Media and markets fight the same war: regardless of inflation, GDP, unemployment: everything is on the right path, although all statictics faked, and PM are completely unnecessary. The same case at the markets: Centralbankers money is pushing stocks to a daily all time high, whereas the same money is used to drop gold and silver.

            But the truth is: Centralbankers are caught in a trap. They can never stop this money-printing, nor can they raise interest rates. The best result they could get was gaining time. My guess is that they never had any other plan. Without trillions of $/€ banks would crash (MBS), budgets would collide. Banks and gov´s are actually out of money, unless “the rest” keeps on smiling and working! Wasting lifetime, for the bankers sake of gaining time…?

            I wondered why they did not crash prices to 600 and 10/oz. Everybody would be eased “cos economy is doing fine…” “My job too”…. But those who push prices down own shares of mining companies, and indeed, a short-squeeze would be more than likely triggered by Chinese demand.

            We did the right thing. But we did not see that inability of politicians and unscrupulousness of banksters, both sitting in deep doo-doo.

            If somebody had any solution for the problems suspended since 2008, I would sell all my PM´s at once, irrespective of prices. I would save the money or spend those euros for something, retire and… that is just a dream, isn´t it?

          • itsonly me,

            Actually the physical metal does not drive the price in the market. It is well known that the big commercial shorts did not ride up by adding a massive number of short contracts when silver hit $49. That time around, JP Morgan was not really participating. It was really bizarre… almost seemed like a test.

            The price of silver or gold is not being valued according to its physical asset strengths along with most other commodities. The real problem is the over $100 trillion of supposed paper assets where most people are invested. These paper assets are based on a growing energy supply. Peak Oil is here, so these paper assets have no future.

            It was the siphoning of investors funds AWAY from physical assets and into the $100 trillion plus Derivatives that destroyed the MARKET PRICING ABILITY for physical assets such as gold and silver.

            This is the crime. Not the silly paper price volatility we have experienced over the past 5 years.


          • GermanReader | August 25, 2014 at 11:18 pm |

            itsonly me

            You got me wrong , I mean I don’t buy into this blacklightpower thing.
            I am a very stong believer in the silver story.

      • Steve,

        If did not reply on this balck light power. Indeed, energy infrastructures are not there for the next couple of decades but it does not mean that this technology could not be efficient in the very long term.

        • “The physical markets always fix the price. We could see that in 2011. JPM and so on could not afford push the prices lower…..”

          In 2011 the realization of gold at $1,900+ and silver at $47+ and climbing, SANK IN to the Fed Reserve, U.S. Treasury, other factions of the U.S. government, similar central banks & governments of Western-alliance countries, and even Eastern & Asian countries. The price left “unchecked” to free market forces would severely damage their fiat currencies. Fiat money, whether printed paper or digits on a computer monitor, are waiting to pour into the next investment going up, particularly that which has been the gold standard and silver standard of what money is going back thousands of years. A mania phase of prices in PM’s will “upset the apple cart” on fiat monetary games run by virtually every government on the planet.

          That is when more sophisticated HFT computer programs were written and implemented…to the delight of JPM et al, for their fun and profit. Meanwhile the CFTC, treasury, etc., just looked the other way.

          In silver which I understand better than gold, I fully expect that regardless of the costs of mining, refining, oil prices, political upheaval, or anything else the price set on the Comex will not exceed $22 or $23 per ounce….until the ability to manipulate prices completely breaks down. That could be a couple years; who knows. That is the “borrowed time” we have left on our economic system as we know it.

      • Nigel Ashton | August 26, 2014 at 5:46 pm |


        You really should give this more than a cursory glance. You have not grasped that although the technology is novel and a huge breakthrough, it is not complex, and is aided by the utilisation of existing technologies which themselves are mature in terms of research and product development and viable market development eg PV panel production. EROI derived from this catalytic reaction are enormous, hundreds of times the output per unit mass of natural gas. This is not low EROI, it’s exactly the opposite.

        In fact it reminds me of the speculative work Hubbert himself did in the 1956 paper he produced Ref: Nuclear Energy and the Fossil Fuels, Figure 30, p36 [http://www.hubbertpeak.com/hubbert/1956/1956.pdf].

        In that graph he predicted the rise of nuclear energy to avert the peak oil. Although incorrect in the type of fuel, he could nevertheless be proved correct in the magnitude of the energy available for society to consume.

        My only concern is that there is DoD involvement. This is probably why it has seen the light of day in the first place. The question is will this be used for the empowerment of society or will it be turned into a tool of control and destruction?

        Nevertheless, as mentioned earlier the prospects for silver are very good as PV panel demand will rocket and with it silver industrial demand.

        Kind regards, Nigel

    • From their web site:
      ” … uses a catalyst to cause hydrogen atoms of water molecules to transition to the lower-energy Hydrino states by allowing their electrons to fall to smaller radii around the nucleus. This results in a release of energy, that is intermediate between chemical and nuclear energies, and a nonpolluting product. … ”

      What? This is total BS. This is a total scam. Also, their stated production per acre is no better than that of PV.

  2. We must remember… ALL FIAT CURRENCIES ARE LIES that die in the end.

    They certainly have been able to stretch this lie out for a very long time. The rubber band should snap soon or I certainly hope so. If not then they have a death grip on all of us that may last for a much longer time. This needs to END!!!

    • WillyT,

      I would imagine 100% of precious metal investors AGREE with your sentiment. While anything can happen from here on out to collapse this highly leveraged DERIVATIVES-DEBT-JUNK BOND MARKET, the peak and decline of cheap oil production will most certainly destroy it once and for all.


  3. The most interesting question after the crash is how PMs is valued to hard stuff like food, land, buildings etc.
    If today one can buy a pice of land or food for an certain pice of gold, how will that pice off stuff be valued in gold after the smoke is gone?

  4. GermanReader | August 25, 2014 at 3:12 pm |

    It is also very remarkable that open interest on comex reached a six year high.


    I guess something big could be on the way.



    Wake me up when a real newsworthy event of note occurs, like:
    TSXV goes to zero= LIGHTS OUT for miners.

    OR, better, at least one of those top tier assclowns, OOPS I mean gurus/experts, files for BK, as they surely deserve to.
    i’ll pick the 3rd anniversary of the top coming up here SEP 1 as the date i’d like to see as apropos, but feel free to pick any closeby date.

    We now return you to “Rappin’ With the Tard”:

    • Tom,

      I Actually watched ole TARD’s video and have to say, there isn’t much on this one that I disagree. The points he makes about Energy and Infinite growth I have been discussing for years. So, yes.. we are on the same page there.

      The only thing that I try to discern more about is what to do with ones GOLD & SILVER after the be crash. Many say its good to sell a good percentage and buy some other physical asset. This will be very tough to do because most physical assets derive their value from a growing energy supply.


      1) Most Commercial Farm Land
      2) Most Suburban & Commercial Real Estate
      3) Most businesses

      I think owning Real Estate in small farming-ranching communities will be a much wiser consideration. Owning local and regional farming, basic manufacturing-clothing investments will be much safer than any of the LARGE CHAINS.

      We must remember, when PEAK OIL HITS… ECONOMIES OF SCALE goes back the other way.

      Local & Low Impact Regional will be KING.


      • Owning a business that supplies the most essential services, like the relatively inexpensive health care from a PCP, chiropractor, physical therapist, or other business that meets essential human needs will be solid, but not necessarily as profitable as in the past due to customers having to pay cash when medial income is down, unemployment & underemployment is down, and food, electricity, etc. are up, and of course government controls or interference.

        Land one lives on AND raises their own food will be a good investment.

  6. It’s true “THEY” can keep this ponzie scheme going for quite awhile. However, there are forces attempting to change the game and I feel their efforts will be successful. Speeding up the inevitable demise of fiat. Was there any one entity responsible for the draw down ? I think silver will out preform gold, on a % basis. Thanks for the report.

  7. Hi Steve, I know this is OT, but its been your latest post (I had hoped, it would be an energy topic). Steve and blog readers, please check this out from my german/english language blog:


    With regard to PO and prescious metals I am quite close to what SRSrocco advocates. Wiithout being an oil engineer or so I read a lot on peakoilbarrel as well…

    Andreas from Vienna

    • Andreas,

      Thanks a million for bringing up one of my favorite topics… PEAK OIL. I actually read that post on Ron’s PeakoilBarrel.com. Yes, RESERVE GROWTH is a wonderful thing on paper… isn’t it? The Sorcerers at the EIA are doing the same thing. Making nice charts showing U.S. oil production at very high levels until 2040. Again, it looks good on paper and that allows Americans to sleep better at night.

      The world has deluded itself into believing infinite growth will continue forever, because the alternative is an UGLY COLLAPSE.

      Unfortunately, the UGLY COLLAPSE is the most probable outcome. Which is why I believe the precious metals are the safest STORES OF WEALTH to own. For those who say, Water will be more valuable than gold or silver, that might be true. However, if someone wanted to sell you water, they won’t take worthless FEDERAL RESERVE NOTES, but rather precious metal coin.

      Thanks for stopping by and sharing your website article. Everyone, please take a look at Andreas article:



      • Thanks Steve. I also think, that an EROI of let’s say 20 and one of 5 MUST make a difference. But then…. EROI has been fallling relentlessly for decades now. And the ugly collapse ypou mentioned has not yet materialized.
        Don’t get me wrong, I don’t look forward to doom, but sometimes I think, that the thing goes on and on and on and I wonder how this is possible with a seemingly dysfunctional system like this.
        See you,

        • Andreas,

          You are correct.. the system has gone on and on. I never said the COLLAPSE would be tomorrow, rather I said ‘ITS COMING.” The Roman Empire didn’t collapse overnight, but indeed it did. Even though the EROI of shale oil is 5/1, the United States still imports high EROI oil from foreign countries. So, the average EROI of oil consumed by the United States may be something like 15/1.

          The REAL DANGER for the United States is when the PETRO-DOLLAR SYSTEM dies. Then the United States will have to pay a much higher price in relative terms to the rest of the world. This will destroy the ability for the U.S. to import oil… thus lowering the overall EROI.

          Furthermore, when the Dollar finally crashes along with the Broader Stock and Bond Markets, so will the FACADE called the SHALE ENERGY REVOLUTION. Which means, we would have a falling domestic oil supply as Shale Companies go bankrupt in large numbers.

          While it’s certainly true that the U.S. Empire has gone on longer than it should have.. TIME IS RUNNING OUT.


          • Steve,
            I learned about the inticacies of shale esp. on your site and of course on peakoilbarrel.

            This is a (german language) blog post of MINE, relying in big parts on YOUR “Fracking is destroying balance sheets”


            You really do an extraordinary job in explaining the complicated financial stuff in a way, laymen can understand it and that’s why I like your blog.

            Basically I am on the side of shale oil sceptics, but shale possibly can serve as an extension of oil age longer than anyone of us can imagine – like your north slope and our north sea, different types of EOR, deepwater and whatnot. This is good, bc. crude is high quality energy (I am not so sure about AGW) and it would be better, if newly found energy riches would be used to help us prepare.

            1 question (or maybe an idea for a new post): What about the rest of the shale deposits in the US, I mean those Ron P. or Jean Laherrère is NOT writing about ? Can they be developed like North Bakken or Eagle Ford ? I so, the limit may be the sky…. Cheers, Andreas

          • Andreas,

            If you read the newest post on PeakOilBarrel.com, Jean Laherrere disagrees with the EIA’s optimistic estimate of a relatively high level of U.S. oil production by 2040… mostly due to Shale oil. Laherrere believes the U.S. will only be producing 1 million barrels per day by 2040 and not the 7-8 mbd the EIA forecasts.

            Which means… SHALE OIL will not be the SAVOIR everyone thinks. I believe Laherrere’s 1 mbd forecast is a more realistic than the EIA’s 7-8 mbd.


    • GermanReader | August 26, 2014 at 1:12 am |

      Great Blog, I added it immediately to my bookmarks.

  8. A very important question that nobody ask: Who is buying ? Individuals ? bullion banks ? Industrials cie ?
    Can we have some infos or data from the exchange itself ?

  9. If the gold and silver price is more of a paper market and the Shsnghai Exchange is more of a physical metal markey, wouldn’t the price be higher

    • Hi Dirk,
      there is a premium for Shanghai versus London/comex of about 8% right now. Other places trading physical have even higher prices. India and Russia have prices of around 15% higher then London but import duties could be part of the difference.

  10. So? To prevent Shanghai silver going to zero inventory, will COMEX and the Silver Users Association shift some hard silver across the Pacific? It is disquieting that gold and silver didn’t start racing by mid February 2013 after the NY FED announcement that the Germans could have their gold back by 2020. It suggests that world supply could reach zero, and prices still remain flat. But that’s only some cynical voice I hear in the background. Oh, and the 6,643 gold 100oz bars the State of Texas allegedly “owns.”

    • Mr.Savoie,
      So glad I get a chance to thank you for your tireless opposition to the Thieves,Pilgrims,and Politicians taking silver from the people.A top bloke you are.
      And thanks Steve,all the silver/gold moaners should really have bought stocks and shares.They are not strong hands like us.Live by the sword,etc .Here endeth the lesson))).

      • yuan abet,

        Did you take the “Here endeth the lesson” from one of my most favorite Monty Python movies “The Meaning of Life?”. “Spotted twice they the Camels before the third hour… and so the Mennonites went forth to Ram Gillard…”

        God I love that scene.


        • Was a big fan in my yoof. Had all the DVDs but that phrase is just part of my common culture with the Pythons.standard pulpit speak.sorry)))

  11. Are you guys missing the Big Story here?

    That big drop in Silver stocks surely means that Silver is now very “squeeze-able” in Shanghai.
    Any day now?:

  12. “If ISIS is able to spread its control into Saudi Arabia…”

    ISIS is the Saudi proxy in the fight against the Shia.

  13. Hi,
    Is there a ratio what percent of the trades are just paper over real metal purchases?

  14. “What does the continued draw-down of silver at the Shanghai Futures Exchange mean?”

    I believe it was Koos Jansen that discovered the low silver price along with the 17% vat has caused chineses refiners margins to evaporate. If they cannot make a profit on refinning silver, they will have quit importing dore and are thus witholding restocking the exchange warehouses. Thus prices will need to rise in order to restock.

    • Outlookingin | August 26, 2014 at 12:07 pm |

      Physical silver supply on a global basis is very tight. We must remember that the global physical silver market is miniscule compared to almost all other commodities.

      Physical silver premiums (at the moment) are upwards of 15% over the daily paper price fix. As physical supply completely dries up, these premiums will rise much higher, pressuring the paper price fix and the massive short build up. Only much higher prices will lure physical silver out of hiding.

      The above occurrence is what has the silver price manipulators, suffering loss of sleep. The silver price “spring” can only be kept coiled down for just so long. When it lets go, is when the monsterous global derivatives over hang crashes.

      • “Physical silver premiums (at the moment) are upwards of 15% over the daily paper price fix”.

        Not sure where you shop but as I post online 1 oz generic is available at 75 cents over spot.

  15. “What does the continued draw-down of silver at the Shanghai Futures Exchange mean?”

    As a matter of fact I don’t care that much about what does it mean.
    I’d like to know instead what will happen when the SFE inventories go to zero.
    Exchange default?
    Inability to deliver?
    Longs unable to get their bars?
    Trading halt?

    Will that default we have waited for years now to happen at the comex happen now in Shanghai?

  16. May I be so bold as to speak for all the non-disillusioned metal purists when I say that every minute that passes brings us closer to our collective expectations. 56% in the prior two months brings SME to default by November. So what will happen when no more silver is left to be had on the exchange? All those seeking to dump fiat for phyzz accept defeat and go quietly into the night ?! I friggin doubt it !!! They find another exchange that delivers or begin to raid the dealers. I’m not certain but I feel pretty safe saying that all metals dealers combined don’t have enough silver on hand to accommodate the upcoming requests. I’ve got the time and I’m phyzzically prepared. Bring it !

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