London Float of Vaulted Silver Drawn-Down By 8.1% in August 2024

The Physical Silver Market Is Becoming Active In London

You can observe a lot just by watching.

Yogi Bera.

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In this recent post, analysis of London Bullion Market Association (LBMA) data indicates that the London silver market, the world’s largest physical silver trading market, has an open interest of total standing claims of between 4.3 billion (B) oz. and 6.4B oz. in its spot/cash market.

When it is noted that these spot claims are for immediate ownership of physical metal bars with total global annual production of silver estimated at 1.003B oz. in 2024 with a 265M oz supply deficit in 2024, our curiosity is naturally awakened.

Recent LBMA data also shows us that at August 31, 2024 the total London vault ‘float’ or vaulted silver not owned by ETFs stood at 0.309B oz. or 9,599 tonnes (please see Figure 1 below).

At July 31, 2024, the total prior silver float in London vaults stood at 0.336B oz. or 10,440 tonnes.

This yields a 27M oz. or 8.1% draw-down of the total London float in the month of August.

Consider that of that 0.309B oz. in London vaults, the large majority of the London vaulted silver is closely held and not available to market.

Generously assuming that even 50% of this vaulted float is available to market leaves a net float of London vaulted silver of 0.155B oz. available to market.

If the August run rate of draw on the London float were to continue in September and onward, it will not take too many months before this market becomes disrupted. And that will occur before the float goes to zero.

Figure 1 - London Vaulted Silver Holdings; data source: LBMA, chart by goldchartsRus.com

Limited physical silver and gold holdings in London’s vaults and the mad paper leverage of claims created on these physical bars created with oversight by the Bank of England gives false pricing and gearing that can rapidly lead to default by the bullion banks that have sold these ownership claims for metal bars into the global financial market.

Let’s watch.

Best regards,

David Jensen