August 2022

The silver market has been bombarded with commentary about how silver inventories in London and New York are falling in an unprecedented fashion to ‘critically low’ levels that indicate silver prices are about to ‘explode’ to record levels.

Inventories have declined, but:

1. They remain at historically high levels
2. Past inventory declines have not caused prices to rise.
3. The biggest upward move in silver prices ever coincided with inventories rising to record levels.
4. The decline since the start of 2022 is not unprecedented.

Silver inventories in London have been declining over the first seven months of 2022, with perhaps half of the drop reflecting liquidation of silver ETFs.

The table at the bottom of this page compares current major market reported silver inventories this week to levels at the beginning of 2018 – before the most recent bull market in gold and silver prices began. 

It shows that Comex registered inventories remain 23% greater than they were at the start of 2018 while total Comex reported inventories (included eligible but not registered silver in Comex registered depositories) are still 35% larger. London stocks are down from 2018, but still 5% larger than they were when the London depositories began reporting stocks in 2016. Shanghai reported inventories meanwhile are 56% larger.

Charts below illustrate more of this.

The first chart, at the top of page two, shows total estimated inventories of refined silver in bullion bar and coin forms, including CPM’s estimates of unreported inventories held by investors and industrial companies around the world. The total is around 5.5 billion ounces of silver. That is up from less than 4.0 billion ounces in 2004, but not much higher than it was in 1989.

There has been a big shift since 1989, however. Today much of the metal is held in coin form and in ETFs. The latter did not exist in 1989, while the era of government issued official tender bullion coins had only begun in 1986 when the U.S. Mint had started the Silver Eagle program and 1989 when the Royal Canadian Mint followed with its Silver Maple Leaf.

So, there is a lot of metal around. Market reported inventories meanwhile remain a rather small part of that total. The reality is that publicly reported silver inventories always have been a small portion of the total amount of silver held around the world.

Looking at the current decline in Comex registered and eligible stocks, the decline is clear on the smaller chart on this page. Month-end total Comex reported inventories of silver peaked at

397 million ounces in January 2021, at the end of the economic lockdown and the beginning of the restart of business activity. Registered inventories peaked at 150 million ounces at the same time. That was up from the 45 million ounces at the start of 2018 mentioned on the previous page. Since that time registered silver inventories have declined to 55 million ounces. The chart below shows that 55 million ounces is still higher than levels from 2003 through 2017.

In other words, the decline in Comex registered and total inventories since the beginning of 2021 correlates with the economic recovery in silver using industries. Moreover, even with the sharp 95 million ounce drop from record high levels at the height of the global economic lockdown they remain higher than at typical levels. There is no shortage of Comex registered or total reported inventories of silver.

• Another point to counter is that the decline in London and New York inventories is not unprecedented.
• More importantly, not only is it unprecedented, but past movements in reported market levels have not correlated with rising silver prices.
• In fact, the largest increase in silver prices in history coincided with the largest increase in reported silver market inventories.

The chart below and table above show three events.

1. In 1979 – 1980 silver rose 10 fold with inventories doing nothing.
2. In the 1990s there was a massive reduction in inventories in two waves and prices did nothing.
3. In the 2000s both inventories and prices rose at unprecedented rates and levels.