Silver stocks at the London Bullion Market Association haven’t been in the best shape for the past free months. Considered the largest silver exchange on the globe, the London Bullion Market Association held more than 1.1 billion ounces of silver in its vaults as of November 2021. However, the silver holdings in the exchange’s vaults have steadily gone down since then, with the past nine months seeing a consistent decline in the metal’s stocks. In figures, silver inventories in the exchange’s vaults have decreased by 21.7% since November.
Data shows that about two weeks ago, fift15een entities owned a combined 592.8 million ounces of the metal in the vaults. This means that only about 325 million ounces of silver are available to other parties. This is quite a decrease, more than 100 million ounces’ worth, especially in comparison to the estimated 470 million ounces of silver that were available to other entities as of November 2022.
The New York COMEX vaults have also seen little silver inflows in recent months, with eligible inventories in the vaults reaching about 250 million ounces. COMEX vaults had roughly 45 million ounces of registered silver on Sept. 8, 2022, which is a drop from the 80 million ounces recorded in December 2021 and the 150 million ounces recorded in December 2020.
This signifies a worrying drop in silver stocks at both the COMEX and London Bullion Market Association exchanges. According to Metals Focus India, the drop in silver bullion could be caused by surging silver demand in India. India is one of the biggest importers of silver globally, with the metal’s price in the country hitting record high.
Data from Metals Focus India shows that the country imported nearly 58 million ounces of physical silver in July of this year, which represents an estimated 50% increase in comparison to any other month over the last four years.
The reduction in silver stocks could also be caused by a shift from net short positions to net long positions by the bullion banks, which facilitate market trades for the metal. This, experts believe, resulted in the absorption of tens of millions of ounces of silver.
Even though mines across the world are producing an average of 70 million ounces of silver per month and silver recycling operations are producing around 15 million ounces every month, this is still not enough to meet global demand for silver. Compared to the monthly supply of 85 million ounces, the monthly demand for silver from the industrial and investment spaces is more than 90 million ounces, eclipsing the global supply and raising the prospect of increased silver prices. Silver producers such as Hecla Mining Company (NYSE: HL) are likely to smile all the way to the bank once the glaring differences between silver supply and demand hit the market.
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