In a surprising update, the Shanghai Futures Exchange reported one of the
largest single-day withdrawals of silver off its exchange today. As of
yesterday, the total amount of silver stored at the Shanghai Futures Exchange
(SHFE) was 256 metric tons (mt). If we look at the chart below, we can
see how the SHFE silver inventories grew slightly over the past week and then
dropped significantly today :
From Aug 12th to Aug 18th, the silver stocks at the SHFE increased a mere
5 mt, from 251 mt to 256 mt. However, in just one day, silver
inventories fell a whopping 23 mt to 233 mt today. This was
nearly a 10% decline of total silver warehouse stocks at the SHFE in a single
day. If we convert 23 mt to ounces, it turns out to be 739,450
oz. That’s a lot of silver.
For the individuals who want to see the real proof of the data, here is
the actual screenshot from the Shanghai Futures Exchange website:
These figures are stated in kilograms, which converts to 22.8 mt. I
just rounded the figures to 23 mt. Furthermore, you will notice the
larger 20 mt withdrawal came from the Zhongchu Wusong warehouse. Even
though total SHFE silver inventories declined nearly 10% today, the majority
of it came from the Zhongchu Wusong warehouse. Thus, the
Zhongchu Wusong warehouse suffered a 40% decline of its silver inventories in
one day (50.9 mt to 30.9 mt).
Now compare this to how much was taken off the COMEX yesterday:
Here we can see that the COMEX reported a total 675,541 oz silver
withdrawal yesterday. Even though this is a pretty nice size
withdrawal, it was less than a 1/2% of total COMEX silver inventories. So,
the single-day 739,450 oz silver withdrawn from the SHFE was even larger than
the 675,541 oz removed from the COMEX.
For whatever reason, investors in China have been withdrawing silver from
the Shanghai Futures Exchange at an increased pace ever since the warehouse
inventories peaked at 394 mt on June 15th:
So, in a little more than two months, the SHFE silver stocks have
declined a whopping 41% from 394 mt (June 15) to 233 mt today.
We have seen the same kind of decline at the COMEX Registered Silver
Inventories, but over a longer period of time.
The chart below (from Sharelynx.com) shows the decline of COMEX Registered
from a peak of 70.6 Moz at the end of March to 55.8 Moz currently. This
was a 21% decline (15 Moz) in a little more than four months:
For those who do not understand the difference between Eligible and
Registered Inventories, here is an explanation taken from Jesse’s Cafe Americain site:
The eligible category means that the silver is in a
condition that conforms to the standards of delivery. Size and quality of the
bar in other words. It is being stored at the Comex warehouse, but is not
offered for delivery into contracts.
Registered means that the silver is available for
delivery to those who demand bullion by being registered as such with a
bullion dealer, in addition to being in a fit condition to satisfy the
contract.
Eligible silver can become registered and deliverable if the owner of the
silver declares it saleable at some price. And of course if it is there, and
otherwise unemcumbered by senior obligations or conspicuous absence.”
Investors need to realize something has changed in the silver market ever
since financial turmoil increased significantly due to a possible Greek Exit
of the European Union in the middle of June. Even though we are not
seeing a massive shortage of silver on the wholesale market, that could
arrive overnight.
I will be putting out an article on the upcoming global silver shortage at
the end of this week. I encourage investors to check it out as
it will try to explain how quickly global silver supplies could dry up…
virtually overnight.
If you haven’t checked out THE
SILVER CHART REPORT, there’s a great deal of information on
the Silver Industry & Market not found in any single publication on the
internet. There is one chart in this report (Chart #19) that I
can guarantee that 99.9% of precious metal investors haven’t seen before.
