Wall Street Journal Article Misleads On Global Silver Shortage

Deception by an omission of the truth is as bad as a lie.

Jennifer Chiaverini

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On September 27, 2024, the Wall Street Journal published an article Why Silver Is Having A Golden Moment in which it profiles the global shortage of silver and the current run higher in the price of silver.

The article contains the following quote regarding the amount of silver that is available on exchanges to meet market demand:

“For now, there is still plenty of silver stacked away in vaults to cushion deficits. There was about 15 months of annual mined silver supply stored in London and exchange-registered vaults at the end of 2023, according to a report from the Silver Institute. But those inventories have dwindled about 26% over the past two years.”

(Non-WSJ subscribers can see the article here: https://www.msn.com/en-us/money/markets/why-silver-is-having-a-golden-moment/ar-AA1rj9Lq )

What is misleading is the statement “For now, there is still plenty of silver stacked away in vaults to cushion deficits. There was about 15 months of annual mined silver supply stored in London and exchange-registered vaults at the end of 2023…”.

The WSJ Omits To Note That Not All Vaulted Silver Is Available To Market

Looking at current data of silver stored in London, New York, and Shanghai vaults, we find that a total 1.228 billion (B) oz. of silver in major exchange vault storage.

The Silver Institute gives total estimated physical silver demand in 2024 of 1.269B oz. when Exchange Traded Product demand (i.e. investment ETF demand for vaulted silver) is included.

However, of the 1.228B oz. stored in London, New York, and Shanghai exchange vaults, not all is available to market.

Looking at NY COMEX exchange vaults, only 70.86M oz. or 23% of total vault stock is listed as ‘Registered’ and thus available to market. Of the ‘Eligible’ vault stock of 236M oz., investors and users of silver store silver in NY vaults and an unknown amount could be converted to ‘Registered’ in the future.

Figure 1 - NY COMEX Depository Vault Silver Stocks; source: GoldChartsRUS.com

Further, in this September 20, 2024 article, this Substack observed that given the intense global shortage of silver this year estimated at 265 million (M) oz. in a global 1,484M oz. annual global market and the fact that the London vault stock of silver has not drawn-down appreciably since 2022 there may be very little of the 843M oz. in London vaults available to market.

London vault silver available to market may be as little as 32M oz. of silver, or less - the London Bullion Market Association (LBMA) isn’t saying - but the London vault data does not speak of abundant liquidity.

The Key Metric Is How Much Silver Is Actually Available To Market

Optimistically assuming that, similar to the NY COMEX vaults, 23% of the total global vault stock of silver in major exchange vaults is available to market then only 282M oz. of this vault silver, translating to 3 months of global demand and not 15 months as stated by the WSJ, is available to “cushion deficits”.

This is a very, very, different picture.

The Shanghai Silver Price Premium Continues To Increase

The latest data on Shanghai silver prices shows that the premium for silver in China continues to snap back increasing now to 9.82% vs New York.

Figure 2 - Shanghai Gold Exchange Silver Price Premium vs New York; source: GoldChartsRUS.com

Numerous indicators including price premia and elevated lease rates to borrow silver tells us there is not, in reality, “plenty of silver stacked away in vaults to cushion deficits” as not all of that silver is available to market.

Best regards,

David Jensen