Guest Post: "Rapidly Declining Silver Inventories on the Shanghai Futures Exchange", by SRSrocco

Our pal, Steve St. Angelo wrote this about a week ago. However, I found it so compelling and important that I asked him if I could re-print it as a "guest post". He happily obliged. Thanks, Steve!

So please take the time to read this report. Keep in mind that the Shanghai Exchange primarily settles in physical. Having seen their inventory depleted by 90% in the past 16 months, the questions become:

  • From where will they get the silver to replenish their inventories for future deliveries?
  • What would become of Comex silver inventories if they actually settled in physical metal instead of paper warehouse receipts?

So, with these questions in mind, please take the time to read this important and insightful article.

TF

"Chinese Silver Inventories Nearly 90% Depleted At Shanghai Futures Exchange"

by, Steve St. Angelo aka SRSrocco

Chinese silver inventories grow increasingly tight as stocks at the Shanghai Futures Exchange continue to fall to record low levels.  It is truly amazing to watch how much silver inventories declined at the Shanghai Futures Exchange since March of 2013.

It’s important to understand that the Shanghai Futures Exchange as well as the Shanghai Gold Exchange behave more as a physical delivery market than the COMEX.  I was speaking with Chris Marchese, analyst at Silver-Investor.com on this very subject.

I don’t spend a lot of time researching or analyzing the trading behavior in the silver or gold futures market.  Chris went onto say the most of the silver and gold contracts at the COMEX are settled in cash, whereas the vast majority of contracts on the Shanghai Exchanges are settled in physical metal.

Which is probably the reason we are seeing a huge draw-down of silver stocks at the Shanghai Futures Exchange.

Let’s first look at what took place at the Shanghai Futures Exchange during the month of July.  On July 1st, there were 234 metric tons of silver held in warehouse stocks.  However, in the beginning of the month and especially during the last two weeks, there were large withdrawals.

As you can see, by the end of the first week of July, silver inventories fell 30 metric tons (mt) from 234 to 204 by July 4th.  There were some small withdrawals and deposits over the next several weeks, but the net change amounted to a 12 mt withdrawal by Friday, July 18th.

Then in the last two weeks, withdrawals picked up considerably.  There were 23 mt removed by the week ending July 25th and another 21 mt during the last week of the month.  Here is a screenshot from the Shanghai Futures Exchange website showing how much silver was withdrawn on Thursday, July 31st:

In one day, 15 metric tons (15,278 kilograms) were removed,  which accounted for nearly 10% of remaining silver stocks.

While withdrawals of silver from the Shanghai Futures Exchange were substantial during the month of July, if we look at a more longer-term chart… its even more impressive.  At peak inventories, the Shanghai Futures Exchange held 1,143 mt of silver in March, 2013.

After the PAPER SMASH in the price of silver in April, we can see just how fast inventories declined.  By August, 2013, silver inventories at the Shanghai Futures Exchange fell 610 mt to 533…  a staggering 53% decline.  Inventories continued to fall, but a slower pace until they reached a low in November at 418 mt.

Then over the next three months, there was a build of silver stocks to a high of 575 mt in February, 2014.  Interestingly, the price of silver and inventories at the Shanghai Futures Exchange both increased during the same time.  As the price of silver went from a low of $19 at the beginning of February to a high of $22 at the end of the month,  silver stocks increased by 84 mt (491 mt to 575 mt).

Once the price of silver started correcting lower, inventories declined in March to 417 mt, and then a huge fall to 246 mt by the end of April.  In May and June, silver inventories remained relatively flat as spot price bottomed then headed higher in June.

When June rolled into July, once gain, the price of silver headed lower right along with the decline in silver warehouse stocks..  Another 86 mt were withdrawn in July as inventories are now the lowest level (148 mt) they have ever been.

In a nutshell, silver inventories declined nearly 90% from their record peak set in March, 2013.  The Shanghai Futures Exchanged experienced a net decline of 995 mt from March, 2013 to the end of July this year.

Lastly, Chris stated that trading volume on the precious metals exchanges are heading East to Asia.  He said that trading volume the Shanghai Futures Exchange and Shanghai Gold Exchange are nearly 3 times higher than the volume at the COMEX.  Investors are beginning to realize the COMEX is nothing but a paper rigged market so they are moving to Exchanges where one can actually acquire PHYSICAL DELIVERY.

Things seem to be getting quite interesting in the precious metal markets.  I discussed this in my recent article, Three Signals For A Huge Silver Spike In 2014.  If you haven’t read the article… it’s worth a look. (http://srsroccoreport.com/three-signals-for-a-2014-silver-spike/three-signals-for-a-2014-silver-spike/)

Next week I will be publishing diesel consumption figures for the top 5 gold miners in 2013.  It took some time, but after a few phone calls, I was able to acquire the remaining data necessary to complete my charts.

Please check back for new articles and updates at the SRSrocco Report.

http://srsroccoreport.com

30 Comments

silver66's picture

First

My lucky day

Now to read the post and then go outside and enjoy the day

Silver66

bluefish's picture

COMEX etf

If there was an ETF that owned COMEX futures contracts, stood for delivery and then sold on to precious metals buyers I think I would have a little of that. How much delivery would it take to break the cycle of short selling manipulation? I expect Sprott Asset Management could do this blindfolded if they chose to.

Silvergunn's picture

Thurd it is, thanks Turd

Always awesome to have SRSrocco in the house!!!

treefrog's picture

furth

IVth

Spartacus Rex's picture

Another Thing About " 90% "

Here in the U.S.,  it is only the " 90% " Gold & Silver Coins that are actually Money / "Dollars" /$

So in all your prepping and stacking, make sure you indeed have plenty of these.

Cheers, S. Rex

SS121's picture

bluefish re: how a billionaire could 'bust' the paper market

your post reminded me of a similar physical market game theory that i used to kick around.  

here it is-

I've got 10 billion dollars (Sprott, HSP, Greece, and Turd sponsored me)

I take my 10 Billion dollars and i go to 10 of the larger cities in the U.S.  say...

NY - Chicago - Houston - L.A. - Philly - Phoenix - San Antonio

San Diego - Dallas - Atlanta

In each of these cities I open up a tiny little store in a strip mall or 'where ever'.

The sign on the outside of each of those 10 stores says-

SELL SILVER HERE  $50.00 Per Oz. 

Each of the 10 stores gets $1,000,000,000 of the $10,000,000,000 that Sprott, HSP, Greece, and Turd originally 'donated' to the cause.

Holding 1 Billion Dollars and paying out 50 bucks an ounce, each store has enough cash to purchase 20,000,000 (20 million) ounces of physical silver,  from the public.  And that is the policy- 1- Only buy from the public who physically brings the silver into the store.  2- $50.00 per oz. and 3- We don't sell it back for any price

Now let's push -PLAY- on this game theory.  What happens?

Obviously some people would start running back and forth to the LCS. But how long would that last, really?

after a few purely fiat profit trips, some would probably start thinking "hey, not only is this too good to be true, but maybe i should hang on to some of this Silver.

how would the Local Coin Shops react?  Would they quickly catch on and only sell Silver for 49 an ounce, while quickly selling out and re-ordering from their wholesalers? 

It's interesting to play out, but what seems fairly certain-

  • My stores would all run out of people willing to come in and sell, before they ran out of cash. 

so then maybe change the 10 signs on the 10 stores in the 10 cities to-

SELL SILVER HERE  $100.00 Per Oz.

...but then business might get even worse!  wink

----

sierra skier's picture

Thanks for the Update Report.

Thanks for the Update Report. At least in Shanghi they are running their exchange the way it is supposed to be run instead of just shuffling leveraged paper back and forth.

DeaconBenjamin's picture

Jean Marie Eveillard on Value Investing

Value investing works over time, but the key words are “over time.”  If you are a value investor you are a long term investor.  Ben Graham used to say “Short term, the stock market is a voting machine.  It is market psychology that prevails.  Long term, it is a weighing machine that weighs the realities of businesses.”  

If you are a value investor, you are a long term investor.  If you are a long term investor, you accept in advance that every now and then you will lag your peers and the benchmark, because you are not trying to keep up with your peers and the benchmark on a short term basis.

Clearly, the precious metals are a value investment.

Eveillard went on to describe how, from 1997-early 2000, his fund lost 2/3 of its funds under management because he did not choose to participate in the dot com mania.  However, from that low in early 2000, his fund now has 50 times as much under management  because of the success of the principles he followed.

This is a subscription podcast.  Jean-Marie Eveillard: Value Investing - Why It Holds Sway in Today’s Treacherous Landscape http://www.financialsensenewshour.com/broadcast/insider/fsn2014-0807-evillard-weiverp.mp3

treefrog's picture

@ ss121

an interesting variation.  instead of the "SELL SILVER HERE  $50.00 Per Oz."   a sign "SELL SILVER HERE,  $10.00 OVER SPOT - CURRENTLY $30.00"  updated hourly to the average spot + $10 price of the last previous hour.  how long do you think it would take to get the price to $100/oz?

SS121's picture

-treefrog

I see what you're saying, but no, no more letting the fake chart wag the physical market.  

no more referencing the fake silver chart to determine the price of physical transactions.  

Better to help people start using their noggins again and get back to monetary reality. 

Only Silver and Gold are Money

Cleburne61's picture

The Watchman Lives

To all my fellow Turdites out there, I wanted to make you aware that the writings of the Turd, the Doc, and many others have made me realize that I have a desire to be a truth teller as well, and that, Lord willing, I've got something to add to our PM community. 

For the last 5 months, I've been working hard on my own website, and just launched it yesterday!

http://thewealthwatchman.com/

It's a labor of love, and while it's still a work in progress, I feel relieved and pleased to have it running!

I am the Wealth Watchman, and I hope to speak to international financial reforms, bankster fraud, sound money, and geopolitics, currency wars, and more.  I also hope to do it in such a way that I can bring in those who would be compatriots, if they but knew what we know.  We're the die hards, but there must be an outlet for bringing in more.

I do hope y'all will pay me a visit in the "Truth HQ", and become a Shield Brother(email subscriber).  I'm also on facebook, and twitter as well.

https://www.facebook.com/pages/The-Wealth-Watchman/267143860128135?sk=info

Thanks Turd, for allowing me to mention my content from time to time. This community is one of the best in the PM universe, that's why I'm still here.

-WW

Dagney Taggart's picture

Thank you, Steve

So much for Summer. crying  We just wrapped up a legal matter that was hardly eventful but still needed attention to make it pass quickly. Goddamned entitled rich idiots who take no responsibility for their own idiocy! Lately though we have been extremely busy re-positioning assets in anticipation of certain loopholes closing. Lots of travel and meetings happening.

We are seeing and hearing indications from politically-connected friends of a pivotal time surrounding 1 May 2016. So what is significant about this date? 240-year anniversary of the Bavarian Illuminati (of NWO wet dream fame). As far as we're told, we are supposed to be make sick of war by then so we will readily accept their Utopian hell. Who knows what they have planned on the horizon?

Stay vigilant, my friends.

Dagney Taggart's picture

@Spartacus

As far as I can read, your constitution says nothing about 90% silver coin but it does say something about the states not being able to use anything but gold and silver for debt payment. The 1792 coinage act defines the dollar in terms of ounces of silver. Again, no requirement of 90% purity.

My American friends stack only 3-9 and 4-9 silver for both monetary and industrial use.

 

DayStar's picture

Harvey's Up (TFMR)

Harvey's Up! http://www.tfmetalsreport.com/comment/423229#comment-423229

  • Mark O’Byrne: Gold is up nearly 2% this week on safe haven buying, its best weekly performance since mid-June. Gold hit three week highs overnight at $1,322.60/oz, having started to push higher in U.S. trading hours yesterday due to tensions with Russia and the renewed bombing of Iraq. Traders were surprised that prices were capped from further gains and there was not more of a safe haven bid and more technical related buying after gold broke above the 50, 100 and 200 day moving averages. Silver is outperforming again and is up 0.9% to $20.13, while the platinum group metals are also higher with platinum up 0.4% to $1,489 an ounce. On Wednesday, gold broke out of bullish descending wedge chart pattern that has formed in recent months. The falling wedge is a generally bullish pattern signaling that a market will break upwards through the wedge and move into an uptrend. Another buy signal for gold came when gold rose above the 20 EMA and 50 EMA (exponential moving averages).
  • Harvey: We have stories on the 3 battle zones today: 1. Israel vs Hamas where Hamas again broke another ceasefire. 2, Yesterday, ISIS captured the Mosul dam from the Kurds. These militants could flood Mosul under 100 feet of water and Baghdad under 16 feet. Many Christian Iraqis in the area fled to the mountains and they are without food and water and are helpless. The USA bombed ISIS today as did Turkey. 3. Russia ended its 4 day military exercise and fell back from the border.
  • GoldCore on the Gold Bull: We continue to favour the Dow Gold Ratio chart as a good indicator as to when the gold bull market might end. It is likely to reach the levels seen in 1980, close to 1:1 or the Dow at between 3,000 and 10,000 and gold at between $3,000/oz and $10,000/oz. This will be an indication that the gold bull market will be in its final innings. Provided of course we do not return to some form of gold standard in a coming global currency reset in which gold is revalued to a new much higher fixed price. It is also important to note that there was a 2 year period in the 1970’s when the Dow Gold ratio bounced higher after years of falling, prior to the secular, long term trend reasserting itself. The technicals of gold are increasingly aligned with the bullish fundamentals and the still positive fundamental backdrop of significant macroeconomic, systemic, geo-political and monetary risk. Gold is good value at these levels. The global average cost of production is between $1,200/oz and $1,250/oz. Therefore, there is very little downside risk, while there is significant upside potential. If the very positive demand and supply fundamentals assert themselves then we should see gold enter a new bull market.
  • Ambrose Evans Pritchard: Germany is close to a recession, and the ECB admits the recovery is weak. German bonds yields plunged to a historic low and two-year rates briefly fell below zero on Thursday on fears of widening recession in the Eurozone and a flight to safety as Russian troops massed on the Ukrainian border. Mario Draghi, head of the European Central Bank, said the recovery remained “weak, fragile, and uneven," with a marked slowdown in recent weeks on escalating geopolitical worries over Russia and the Middle East. He said the ECB, which on Thursday held benchmark interest rates at 0.15 percent, "stands ready" to inject money through purchases of asset-backed securities and quantitative easing if needed.
  • Michelle Manchir: Organizers of the US Mint Kennedy gold coin sale at the Illinois expo on Thursday halted sales of the New Gold Kennedy Coins at the World's Fair of Money at the Stephens Convention Center in the Northwest suburb after hundreds of people lined up there each night this week. Some were in line at 4 p.m. Tuesday with the hopes of buying the coin when sales began at 10 a.m. Thursday, said Donn Pearlman, spokesman for the American Numismatic Association. "It just got to the point where, out of prudence, just to be careful, they decided to halt sales at retail locations," said Pearlman.
  • Thomas Biesheuvel: There is nothing wrong with this miner that an end to gold price suppression would not fix. Peter Hambro dared to go where few others would, in search of gold in 1990s Russia. Investors who followed him reaped tenfold returns over eight years through 2010. A repeat of that rich success now looks far away as Petropavlovsk Plc (POG), the company Hambro co-founded, confronts a mountain of debt. In 2010, Petropavlovsk’s market value exceeded $3 billion and it was mentioned as a future member of the benchmark FTSE 100 Index. That’s shrunk to $111 million, dwarfed by about $819 million owed to banks that the company says now effectively control cash flow from its mines. In April, Petropavlovsk said it won’t be able to meet the terms of bank loans by the end of this year and will struggle to repay bonds due in early 2015. Hambro, the company’s chairman, said the lenders have agreed in principle to relax covenants on the debt and he’s seeking to negotiate new terms. The mines’ cash flow is now controlled by Moscow-based lenders OAO Sberbank, VTB Group and OAO Alfa Bank.
  • Ambrose Evans Pritchard: German bonds yields plunged to a historic low and two-year rates briefly fell below zero on Thursday on fears of widening recession in the Eurozone and a flight to safety as Russian troops massed on the Ukrainian border. Yields on 10-year Bunds dropped to 1.06 percent after a blizzard of fresh data showed that recovery has stalled across most of the currency bloc, with even Germany now uncomfortably close to recession. Commerzbank warned that the German economy may have contracted by 0.2 percent in the second quarter and is far too weak to pull southern Europe out of the doldrums. Industrial output fell 1.5 percent over the three months. The DAX index of equities in Frankfurt has dropped 10 percent over the past month and is threatening to break through the psychological floor of 9,000. Mario Draghi, head of the European Central Bank, said the recovery remained “weak, fragile, and uneven," with a marked slowdown in recent weeks on escalating geopolitical worries over Russia and the Middle East.
  • Chris Powell: Former U.S. budget director David Stockman tells King World News today that he doubts that central banks can keep supporting markets much longer, now that "the whole global financial system is booby-trapped with both visible and hidden leverage." But really, why not? Stockman himself notes that the stock market has risen for 62 months, though living standards have declined worldwide. What's to keep central banks from buying everything, making equity prices look spectacular even while leaving everyone else with nothing?
  • Alasdair Macleod: We have known for years that through intervention central banks have managed to control the prices of currencies, precious metals and government bonds; but there is increasing evidence of direct buying of other financial assets, including equities. The means for continual price management are there: there are central banks, exchange stabilisation funds, sovereign wealth funds and government-controlled pension funds, which between them have limitless buying-power. Doubtless there is a growing band of central bankers who believe that with this control they have finally discovered Keynes's Holy Grail: the euthanasia of the rentier and his replacement by the state as the primary source of business capital. This being the case, last month's dip in the markets will turn out to be just that, because intervention will simply continue and if necessary be ramped up. But in the process, all market risk is being transferred from bonds, equities and all other financial assets into currencies themselves; and it is the outcome of their purchasing power that will prove to be the final judgment in the debate of markets versus economic planning.
  • Chris Powell: European and British gold export data isn't reliable, gold researcher and GATA consultant Koos Jansen painstakingly explains today, and the Perth Mint's Bron Suchecki makes a similar observation in regard to Comex gold data. Suchecki concludes: "It makes you wonder if the whole gold industry is held together with spreadsheets. Be afraid -- be very afraid."
  • Jeff Stein: A former high ranking CIA official in Baghdad tells Newsweek that Turkish jets carried out airstrikes on Islamic State (I.S.) militants threatening Kurdish refugees--an assertion that Ankara denies. The White House, meanwhile, said it had launched humanitarian air drops to the beleaguered Kurds trapped by advancing I.S. forces in the northern part of Iraq and was considering air strikes to fend off an expected assault. Kurdish TV claimed earlier in a day of conflicting reports that American jets had carried out the strikes on Islamic State position outside the town of Kalak, 25 miles northwest of Irbil, the capital of Iraq’s autonomous Kurdish region. “The Turks are doing it,” said the former CIA officer. Turkey’s Foreign Minister Ahmet Davutoglu said earlier Thursday that “Turkish aid supplies had been dropped in the mountains near Sinjar in northern Iraq, where about 50,000 Yezidis have taken shelter after militants from the Islamic State drove them from their homes during the group’s latest advance,” Bloomberg reported.
  • Tyler Durden: Despite President Obama's dictating that Russia is increasingly "isolated," it appears they have found a whole new set of friends to play with in the global trade sandpit. In retaliation to Western sanctions, Putin yesterday unveiled a total food import ban from all sanctioning nations, and, just as the BRICS created their own 'IMF-lite' away from Washington's prying eyes, Russia plans to substitute banned goods with not just domestic supplies but imports from Latin America, China, and several other nations. Agriculture Minister Nikolai Fedorov said "no food shortages are expected," but more isolation for the West.
  • Mike Adams: The spread of Ebola to the USA is "inevitable," said the head of the US Centers for Disease Control and Prevention on Thursday. Tom Frieden made the statement in a House Subcommittee hearing, adding that he does not think there will be a "large Ebola outbreak" in the U.S. Does he think there will be small ones? Ken Isaacs, vice president of program and government relations at the Christian aid group Samaritan's Purse warned "the world is woefully ill-equipped to handle the spread of Ebola," reports Yahoo News. (1) "It is clear that the disease is uncontained and it is out of control in West Africa," he told the hearing. "The international response to the disease has been a failure." "If you read the Ministry of Health status reports coming out every day from Liberia, I don't mean to be dramatic, but it has an atmosphere of 'Apocalypse Now' in it," said Isaacs, as reported by Breitbart.com. (5) The spread of Ebola to the U.S. will likely happen due to international air travel, CDC head Frieden warned. Today's Ebola outbreak is the largest ever recorded in history. Is the CDC perhaps preparing America for an announcement that Ebola is now being found in U.S. patients? "The Centers for Disease Control and Prevention has issued its highest alert activation over the Ebola outbreak," reports CBS News. (4) "CDC Director Dr. Tom Frieden announced on Twitter Wednesday that their operations center has moved to a Level 1 response." http://www.naturalnews.com/046378_CDC_Ebola_pandemic_survival_tips.html##ixzz39tRj6y8n

All this and more on...

The Harvey Report! sad

http://www.tfmetalsreport.com/comment/423229#comment-423229

DayStar

AlienEyes's picture

SRSrocco

I wondered why SRSrocco wasn't around much anymore but it seems he is alive and well. That's good to see.

That said, his first chart is somewhat deceptive if you just glance at it. It starts at 100 metric tons as a base so the bars are not actually to scale. The information is dramatic but not as dramatic as it looks.

erewenguy's picture

Just some pictures, just because

Just some pictures, just because

http://mintnewsblog.com/2014/08/gold-and-silver-bullion-storage-at-the-west-point-mint/

Gold and Silver Bullion Storage at the West Point Mint

August 8, 2014 By 100 Comments

As a break from the string of Gold Kennedy Half Dollar posts, I wanted to complete the series of articles from my tour of the West Point Mint. This final article takes a look inside a bullion storage department containing newly $2 billion in gold and silver.

(see the link if you want more than pics)

no, not my basement...

Silver seems to be prone to wandering about, hence, the cage...

 

DeaconBenjamin's picture

My American friends stack only 3-9 and 4-9 silver

Whereas, I stack 80% Canadian as well at 90% US.

Spartacus Rex's picture

Dagnabbit Dagney...

this isn't horseshoes & hand grenades.

The Coinage Act of 1792 does NOT “ define the dollar in terms of ounces of silver”.

The Dollar is defined in grains, NOT “ounces”

But go ahead and ask your “American friends” if they can so much as show you even one single example of a U.S. Silver Dollar Coin minted @ “ three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver”

versus the abundant supply of Dollars minted @ “four hundred and sixteen grains of standard (ie .900 fine / “90%”) silver”

And if your American friends cannot distinguish the difference between .999 /.9999 Bullion and/or Bullion Coins w/ a mere “legal tender” value impressed upon same for “monetary use”,

versus Coins which possess actual statutory “$ / Dollar” value, then you can tell same that Spartacus says: Enjoy bending over and grabbing their ankles every year, as the IRS collects their annual Tithe & Tribute paid to the fiat counterfeiting Banksters.

Anyone think that first rate education is “expensive”? Try ignorance.

Cheers, S. Rex

Spartacus Rex's picture

Latest Koos Jansen & Segment of His Interview w/ Lars Schall

Chinese Gold Demand 1094 MT YTD, Silver Premium At Record High

http://tinyurl.com/pfha2ne 

judejin's picture

it was me who first posted shanghai silver inventory numbers.

shanghai silver went into backwardation again recently.

major silver refineres in china are not making any money at current price so they're holding up the physical price regardless of international paper price.

import duty of physical silver is 17%.

Turd Ferguson's picture

Very interesting and important stuff

MODERATOR

Thanks, judejin!

Markedtofuture's picture

Silver To Gold Ratio 1969-2014

Mark J Lundeen  August 10, 2014

The silver to gold ratio (SGR) is the number of ounces of silver a single ounce of gold can be exchanged for at current prices.  For reasons I’ve never understood some people call this the gold to silver ratio, which it certainly is not.  Typically, but not always, precious metals bull markets can be identified by declines in the SGR and PM bear markets by increases in the ratio, but history shows that these market trends are not bolted together.  I’ve placed some stars on the SGR chart below at key turning points, and here’s a table listing the metal prices with the ratio at those points.

Keep in mind that the table above and chart below are not documenting extremes in silver and gold prices, but extremes in the number of ounces of silver that one ounce of gold can purchase. The 1969 to 1980 bull market ended with the ratio declining to 14.81 ounces of silver per ounce of gold on 02 January 1980.  The high point of our current silver bull market can be identified by the ratio falling to just above 30 on 21 April 2011, though our current peak in theprice of gold didn’t come until August 2011 (not noted in the table or chart) with an SGR of 43.63. 

The first ten years of the 1980-2001 bear market saw the ratio increase from 15.5 to 102 ounces of silver per ounce of gold.  In terms of gold, and in dollars they were practically giving silver away for free in 1991.  However, for the next seven years the SGR declined, ending just above 40 in 1998.  This big decline in the ratio didn’t occur during a bull market in the precious metals, but silver did double in price ending its horrific decline relative to gold from 1980 to 1991.  Our current bull markets for both gold and silver began in 2001 with the SGR rising from 40 in 1998 to just over 80 in 2003, so it’s obvious that the ratio is not a precise method to gauge entry and exit points for bull and bear markets in precious metals.

The main value in following the SGR is to gauge the potential gains and losses investing in silver relative to gold, which is no small thing.  In the past year the ratio has twice failed to exceed 70 ounces of silver per ounce of gold.  I believe that the SGR has peaked, making silver a compelling bargain relative to gold.  In the next phase of the precious metals’ bull market, the ratio should once again approach, and possibly decline below 30.  With the SGR currently at 65, a decline to 30 would make today’s investment in silver twice as profitable as one in gold, and if the ratio once again returns to 15 as it did in 1979, silver would yield four times the return enjoyed by investors in gold.

Continued...http://www.gold-eagle.com/article/silver-gold-ratio-1969-2014

Marchas45's picture

When The Price Goes Up

The Shanghai Exchange holdings will go back up. The time to hold Silver and Gold is when the price is down, any fool knows that, right? Lol It's a gift right now and the SHTF scenario is just around the corner. Keep Stacking

57Goldtop's picture

Look past the headline - bail-ins being prepared right now

Here's a story from Friday. I've asked several people on the weekend if they saw it, and those who consider themselves to be financially savvy all said they smiled at the headline and moved on.

Canadian banks win praise rather than scorn from regulators in contrast to U.S.

Because, after all, we're Canada. Our banks are superior. We don't invade other countries, we don't have guns, and we get free health care... and all sorts of other naive baloney.

The story linked above is about the development of living wills for banks. I guess the Canadian banking oligopoly has better relationships with the regulators than the American banking oligopoly. Golf clap: They're essentially self-regulated. 

And sleep well, dear Canucks, because the OSFI is working closely with the Canada Deposit Insurance Corporation. It's all good.

But read a little further, and you get this (emphasis mine):

Canada is also in the midst of creating a “bail-in” regime that would trigger the conversion of debt instruments into equity to support a failing bank. The aim of such a regime, which also contemplates the potential cancelation of existing bank shares, is to keep governments – and therefore taxpayers — from having to fund a bail-out in the unlikely event of a bank failure.

Federal financial minister Joe Oliver kicked off a six-week consultation on the proposed Canadian bail-in regime last week.

Of course, the CDIC only has a couple billion. Haven't seen the latest numbers, but it's not going to protect from the failure of a member of the oligopoly. 

So how are the banks doing? Awesome. Unless you look at the derivatives reporting. Unless the housing market tanks. Unless rates fluctuate. Unless there's a tiny bank run. Unless the economic system is stalled by, say, a pandemic.

Let's look at the derivatives. I'm compelled to do my own analysis because nobody in the banking business will discuss it. I'm talking about very senior executives who literally don't know this information and find it hard to believe. I'm also talking about FX and risk management traders who might know, might not know, but simply will not discuss it. 

Charts to come later in a more formal post, but let's start with this:

In the most recent reporting period, 1Q2014, 4 Canadian banks increased their derivatives contract exposure by a total of more than $4 billion per trading hour.

  1. TDBank (TD) by $1.407 Billion CAD per trading hour (6.5 hours per trading day, 21 days per month)
  2. ScotiaBank (BNS) by $1.387 Billion
  3. Royal Bank (RBC) by $0.991 Billion
  4. Bank of Montreal (BMO) by $0.735 Billion

We've never seen this level of activity. The previous peaks, though not as high as this one, came in 4Q2008 as silver went from $20 to $10 and in the first 3 quarters of 2011, just before the severe silver sh!t kicking late 2011. 

Each of those peaks was followed by a substantial reduction of derivatives contracts in the following quarter(s), giving the appearance of short term maturity on rate swaps and FX contracts.

More to come, including some thoughts about the strange aggregate data for 3Q2013 when almost $5 Billion per trading hour is unaccounted... and CIBC's quarterly report just happens to not be available. It's the only missing data in the entire set.

I'm not a derivatives expert, and the half dozen I know won't discuss it, so all input is encouraged.

Green Lantern's picture

Re: Look past the headline - bail-ins being prepared right now

good eye 57 goldtop! They won't be smiling when the "living will" kicks in.

My understanding of a will is that when a person dies, they leave money to the living.  Not take other peoples shit to the grave with them.   Love the language.  The financial world is filled with clever language.  Short history if I may.
 

Not sure where to begin?  is it by telling you about how we’ve unwittingly been CAST into the MO...LD of ancient SPELLS of our modern SPELLING? CAST just like a MOLD, or perhaps like a NET? while caught, like fish, in the net of spells and spelling that have been cast, thus SENTENCING us to LIFE SENTENCES and the CURSES of CURSIVE which are just TERMS, just like serving a PRISON TERM.

So we’ve been SENTENCED to the WARDS of these WORDS which can be deadly as SWORDS if misunderstood..... or perhaps you missed the understanding of my TERMS or the SYBILS of my SYLLABLES, or even the ancient RITES of writing??
 

English was created from the ancient Phonic Phonetics of the Phony Phoenician Phoenixes, and it reflects the creativity and cunning genius of the banksters.

We draw money from our banks which are the edges of a river, which FLOWS in CURRENTS to the SEA, which is why its called CURRENCY, because our CASH FLOWS like pyroclastic ASH FLOWS toward the SEA, which is why we can trace back the ROOTS of all modern TRADE to the ancient Phoenician TRADE ROUTES.  It's all to keep your interest, and occasionally float a check.   It's much more polite to inflate the money as it were a balloon cause counterfieting is just too strong.

Our citizen-ship begins when we board the citizen (slave) SHIP, which sails the high seas carrying SEAMEN and it all begins when the male SHIP docks in its female SLOT or SLIP, also known as its BERTH, and unloads its CARGO or SEMEN, which sail up the WATERS of the CANAL.

So she gets pregnant and now carries the precious CARGO and will now give BIRTH to the new citizen that must now register to board the citizen SHIP and repeat the cycle all over again, until the citizens catch on to the ancient spells of the PHONY PHONETIC PHOENICIANS' tools of commerce and piracy of the high seas and the human commodity through the use of their made up languid language, which gives us our modern english.

 Post-Mesopotamian language has had us under the Ol’ Abra-Cadaver trick…. the oldest control trick.. “Thou hast fallen for the eldest trick in the scroll! And thus, the Bible speaks that the dead shall walk the earth, so it appears that they already are, without even knowing it, just by the strange language of which they know not the TRUE origins and what their words mean in etymology. And the SIGNIFICANCE of the SIGNS and sins in SIGNIFICATION of their SIGNATURES on dead legal fictions like IDs and bills.

The Living Will regret not heeding 57Goldtops warning. With buckets in their hands, they will BAIL-IN your currency to dowse the fire of their greed.

 

DeaconBenjamin's picture

Interview with James Dines

Spartacus Rex's picture

Does It Make Any Sense?

6356073_orig.jpg

Safety Dan's picture

Dear David, Sorry, but Your

infometron's picture

Hot off the press... from CME re: Silver

Does anyone more knowledgeable than I know what this is about?

DATE:            August 11, 2014 

SER # :           7146

SUBJECT:     Non-Tradable Marker for COMEX Silver Futures

Effective on Monday, August 11, 2014, Commodity Exchange, Inc. (COMEX or Exchange) will publish a non-tradable daily marker price for the Silver Futures contract (Commodity Code: SI; Rulebook Chapter: 112).

A trade at marker facility will not be available on this marker price.

The marker price will be based on market data from CME Globex between 12:00 p.m. and 12:02 p.m. hours London time, typically 07:00 a.m. to 07:02 a.m. hours New York time.  The marker will be based on prices in the front cycle month. The marker will be published on the CME Group website at http://www.cmegroup.com/trading/metals-marker-prices.html.

For further information, please contact

Harriet Hunnable   Harriet.Hunnable@cmegroup.com   +44 20 3379 3704

Joann Arena         Joann.Arena@cmegroup.com          +1 212 299 2356

SE's picture

$10 Bet

On whether silver reaches $26 by the end of the year.  If it does, I owe you $10, Turd...

Syndicate contentComments for "Guest Post: "Rapidly Declining Silver Inventories on the Shanghai Futures Exchange", by SRSrocco"