Something very interesting took place in the COMEX Registered silver inventories last week. There were two very large transfers of silver from the Registered to the Eligible category. What makes these two large withdrawals so interesting is that the Registered silver inventories are now at a record low.
The first large transfer of silver was reported on June 1st, in which 2.5 million oz (Moz) were taken out of the CNT Depository and another 410,000 oz from HSBC. Nearly 3 Moz of silver were transferred out of the Registered inventories in one day:
Then on June 3rd, another 3.5 Moz were transferred out of the Registered silver inventories on Brinks and put into the Eligible category:
In just three days, the total Registered silver inventories at the COMEX fell from almost 30 Moz down to 23.1 Moz. Thus, COMEX Registered silver inventories are the lowest they have been in more than 15 years.
The chart below, thanks to Nick Laird of Sharelynx.com, shows total Registered silver inventories on the top and owners per ounce on the bottom:
This chart, going all the way to 2001, shows the last time total Registered silver inventories were at a low was in July 2011. This was at the time silver hit a record high of $49. As the price of silver bottomed in 2008 and surged to nearly $50 in 2011, the Registered silver inventories fell from almost 90 Moz down to 26 Moz.
What is interesting this time around is that the Registered silver inventories declined from a peak of 70 Moz in the beginning of 2015 to 23 Moz currently on very low silver prices. Furthermore, the “Owners Per Ounce” of Registered silver is at a record 42. Which means for each outstanding contract (195,000 contracts), there are 42 owners per each ounce of Registered silver.
We can see the big change if we look at a one year chart:
You will notice in June 2015, during the huge spike of retail silver investment, that the total Registered silver inventories were nearly 60 Moz. Over the next several months Registered silver inventories fell to approximately 42 Moz. This was at the time that investors had to wait 2-3 months for certain retail silver investment products.
Then in October 2015, the tightness in the retail silver market began to loosen as the “Forecasted” market crash did not occur. The Registered silver inventories stabilized and leveled off until the end of the year. However, more large Registered silver withdrawals and transfers continued again in January 2016 as the price of silver surged from less than $14 to nearly $16 in March. This was also at the same time the Dow Jones fell 2,000 points.
Even though the Registered silver inventories increased in March, they are currently at 15 year lows. Moreover, the number of Owners Per Ounce of Registered silver has never been higher. If we look at the 15 year chart above, we can see that the Owners Per Ounce of silver went exponential starting in 2016.
Lastly, I believe something quite interesting is going on in the silver market even though precious metal analyst Keith Weiner suggests there is weak demand. Sure, there might be weak demand currently due to falling industrial silver consumption, but the long-term trend points to a much different picture. I will be discussing this in detail in an upcoming article this week.
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