{"id":52753,"date":"2021-02-16T11:38:22","date_gmt":"2021-02-16T15:38:22","guid":{"rendered":"http:\/\/stateofthenation.co\/?p=52753"},"modified":"2021-02-16T11:38:22","modified_gmt":"2021-02-16T15:38:22","slug":"the-whole-world-has-a-very-serious-silver-supply-problem-that-will-only-get-worse","status":"publish","type":"post","link":"https:\/\/stateofthenation.co\/?p=52753","title":{"rendered":"The Whole World Has A Very Serious SILVER SUPPLY Problem That Will Only Get Worse!"},"content":{"rendered":"

#SilverSqueeze hits London as SLV warns of Limited Available Silver Supply<\/strong><\/h1>\n

Ronan Manly<\/p>\n

Less than a week ago in \u2018Houston, we have a Problem\u201d: 85% of Silver in London already held by ETFs<\/a>\u2019, we explained how with the emergence of the #SilverSqueeze, the silver-backed ETFs which claim to hold their silver in London, now account for 85% of all the silver claimed to be stored in the London LBMA vaults (over 28,000 tonnes of the LBMA total of 33,609 tonnes). This, for anyone who can out 2 and 2 together, does not leave very much available silver in London for silver ETFs or for anyone else, especially the largest silver ETF in the market the giant iShares Silver Trust (SLV), which let\u2019s not forget has the infamous JP Morgan as custodian.<\/p>\n

That SLV has seen massive dollar inflows in late January and early February with corresponding jumps in claimed silver holdings is now widely known, but is worth repeating here, for what\u2019s about to come next.<\/p>\n

3,416.11 Tonnes of Silver?<\/h2>\n

The intense market interest in the iShares Silver Trust (SLV) started on 28 January when a huge volume of 152 million shares traded on NYSE Arca. Again on Friday 29 January, SLV traded a massive volume of 113 million shares. This led to an increase in SLV \u2018Shares Outstanding\u2019 on Friday 29 January of 37 million shares, and a same day claim by JP Morgan, the SLV custodian, that it had increased the silver held in the SLV by 37.67 million ozs (1,171 tonnes), all claimed to be sourced in the LBMA vaults in London.<\/p>\n

On Monday 01 February, an even larger 280 million SLV shares traded on NYSE, and by end of day SLV shares outstanding jumped by 20 million. On that day SLV claimed to add another 15.376 million ounces of silver (478.25 tonnes) within the LBMA vaults in London, about three-quarters of the value of the new SLV shares created on that day.<\/p>\n

On Tuesday 2 February, with SLV trading still elevated on NYSE, the iShares Silver Trust created a massive 61,350,000 new SLV shares, bringing the SLV shares outstanding to 729.1 million. On the same day, JP Morgan and Blackrock claimed to have added a huge 56.783 million ozs of silver (1,766 tonnes) to the SLV (again all in London), an incredible amount by any measure, but still short of reflecting the total of 118.45 million total of new shares that had been created between Friday and Tuesday (which led them to adjust down shares outstanding by 8.6 million on Wednesday 3 February).<\/p>\n

Over this time, you can see a nearly one for one relationship between the change in number of SLV shares outstanding and the amount of silver ounces claimed to be added to SLV.<\/p>\n

Between Friday 29 January and Wednesday 3 February inclusive, SLV shares outstanding increased by a net 109.85 million. Over the 3-day period from Friday 29 January to Tuesday 2 February, SLV claimed to have added an incredible 109.83 million ozs of silver (3,416.11 tonnes), with holdings of silver bars rising from 567.52 million ozs of silver to 677.35 million ounces (from 17,651.77 tonnes to 21,067.88 tonnes).<\/p>\n

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Thin on the ground \u2013 Some of the coveted 1000 oz silver bars<\/strong><\/figcaption><\/figure>\n

According to the SLV daily bar lists, this extra 3,416.11 tonnes of silver added to SLV between 29 January and 2 February was in the form of 113,501 Good Delivery silver bars (the bars weighing approx. 1000 oz each). Again, according to the SLV bar list, these bars were added in five London vaults which SLV uses, namely Brinks vault in Premier Park London (45.5%), Loomis London vault (27.7%), Brinks Unit 7 vault Radius Park London (15.5%), Malca Amit London vault (6.0%) and JP Morgan\u2019s own London vault (a measly 5.3%).<\/p>\n

In fact, according to the bar lists, SLV only started tapping into silver in the Brinks Premier park vault on Monday 1 February, and only started tapping to silver held in the Loomis London vault on Tuesday 2 February. Which to some people may look like a case of desperation or maybe even panic.<\/p>\n

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SLV silver holdings over the 6 months from August 2020 to February 2021. Source:\u00a0www.GoldChartsRUs.com<\/a><\/strong><\/figcaption><\/figure>\n

Unable to Acquire Sufficient Silver<\/h2>\n

Adding 3,416.11 tonnes of silver to SLV between 29 January and 2 February is not something that JP Morgan can easily claim to do again.<\/p>\n

Which is why it\u2019s particularly interesting that on Wednesday 3 February, right after claiming to add 3416 tonnes of silver to SLV by frantically tapping the LBMA vaults in London, the iShares Silver Trust prospectus was changed, and the following wording added:<\/p>\n

\u201cThe demand for silver may temporarily\u00a0exceed available supply<\/u>\u00a0that is acceptable for delivery to the Trust, which may adversely affect an investment in the Shares.<\/i><\/b><\/p>\n

To the extent that demand for silver exceeds the available supply at that time,\u00a0Authorized Participants may not be able to readily acquire sufficient amounts of silver necessary for the creation of a Basket<\/u>.<\/i><\/p>\n

Baskets<\/u>\u00a0may be created only by Authorized Participants, and\u00a0are only issued in exchange for an amount of silver determined by the Trustee that meets the specifications<\/u>\u00a0described below under \u201cDescription of the Shares and the Trust Agreement\u2014 Deposit of Silver; Issuance of Baskets\u201d on each day that NYSE Arca is open for regular trading.\u00a0Market speculation in silver could result in increased requests for the issuance of Baskets<\/u>.<\/i><\/p>\n

It is possible that Authorized Participants may be unable to acquire sufficient silver that is acceptable for delivery to the Trust<\/u><\/i><\/b>\u00a0for the issuance of new Baskets\u00a0due to a\u00a0limited then-available supply<\/b>\u00a0coupled with a surge in demand for the Shares.<\/u><\/i><\/p>\n

In such circumstances, the Trust may suspend or restrict the issuance of Baskets<\/u>. Such occurrence may lead to further volatility in Share price and deviations, which may be significant, in the market price of the Shares relative to the NAV.\u201d<\/i><\/p>\n

That the prospectus change was first drafted on Wednesday 3 February is clear by looking at prospectus pdf filename which is \u2018p-ishares-silver-trust-prospectus-3-feb<\/b>.pdf\u2019 and the pdf title \u2018Microsoft Word \u2013 slv20210203<\/b>_s3asr_v1.docx\u2019, which was authored by someone called \u2018nick\u2019. While the draft started in Word, the final version was saved as a pdf on 5 February.<\/p>\n

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SLV Prospectus amendment draft created on Wednesday 3 February, 2021<\/strong><\/figcaption><\/figure>\n

The final pdf date is the same day, 5 February, that the amended prospectus was quietly uploaded to the SEC Edgar website\u00a0here<\/a>\u00a0with an effective date of 8 February. The previous version of the SLV prospectus was from 14 January<\/p>\n

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SLV informs SEC of its amended prospectus, 5 February 2021<\/strong><\/figcaption><\/figure>\n

Below you can see the changes in the new 8 February version of the SLV prospectus compared to the 14 January version.<\/p>\n

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SLV Prospectus”\u00a0Left Hand Side \u2013 14 January version, Right Hand Side New February version<\/strong><\/figcaption><\/figure>\n

BullionStar picked up on the fact that there was a new prospectus with the suspicious 3 February date, and then a twitter user (h\/t\u00a0Roelzns<\/a>) compared the two prospectus versions to pinpoint the amended text:<\/p>\n