The Corner Of Silver

July 13, 2018

In 2017 investment in silver (physical bar, coin purchase and ETF) fell by 40%. In value terms, annual identifiable investment was worth $2.6 billion for the whole year. And In the first 6 months of 2018, investments just in silver physical bars jumped to 27.3 billions Dollar. In such a small market, it is an explosive information.

The silver price is still under $16 today, but it won’t last long at that level. With an open interest around 1 billion ounces on the Comex, there will be a huge SHORT-SQUEEZE before the end of the year.

Remember, the rule for silver as for gold:  if you don’t hold it, you don’t own it.

The Silver Market

Underground Reserves Of Silver

The USGS produces annually a report on mine production and mineral reserves. For decades, the USGS accounted "reserves" on one hand and " reserves bases" on the other. The latters are known reserves but not exploitable in the economic conditions of the reference year. All these documents are available, year by year, from 1996 to 2018 on this website.  I compiled its data in the table below.

From 1995 to 2008, the USGS officials reported the same number of silver  « reserves » 280,000 t,  and  420,000 t  for « Reserve base », regardless of the mines production.

In 2009, the notion of silver "basic reserves" disappeared and were amalgamated to the "reserves ». There was just 510,000 tons of silver to mine in the World.

On the right of this table, I did the work of the USGS officials by taking the 1995 "reserve base" figure and subtracting mine production year after year. In 2010, the "reserves base" should have been only 141,400 tons.

Underneath, I took over their 510,000 tons of the known total silver reserves from 2010, from which I subtracted production year after year.

More or less, there are only 307,500 tons left in underground silver reserves.  At the current pace of mining, this represents 12 years of production. In 2030, only a residual production will remain.

12 years does not remind you of anything? Nor 2030?

"The Club of Rome" was a think tank of scientists, economists, industrialists and international officials who have questioned the future of our societies and the "limits of growth". This was the title of their report published in 1972, the result of four years of studies, analyzes and forecasts. The 1972 report announced a very worrying future for humanity and foresaw the collapse of our society by 2030.

This report translated into 37 different languages has been sold to 12 million copies. It was the Bible of our governments after the strong growth of the 30 glorious post-war years.

In 2012, a second report produced by the same actors, using the same methodology as the first one with updated data benefiting from the most modern computer tools, was made public. This report arrived exactly at the same result as that of 1972. It still provides for the collapse of the present society for 2030.   The countdown began 45 years ago, and there are only 12 years left.

The table below shows the global reserves of raw materials and the date of their depletion.  If you look for the Silver, resources were supposed to be depleted by 2020.

There will always be silver, but the ore content will be lower and therefore more expensive to extract.  As for silver sleeping on the ocean floor, prices will have to go up a lot to make it profitable to open mines at great depth.

Mining production has increased in recent years, despite the continuing decline in silver content in mined ores, both in pure-silver mines ( graph above.) but also with lower grades in copper, lead or zinc mines, where silver is a by-product.(70% of the silver production).  



Nevertheless, for more than 50 years, Silver demand has been stronger than supply and the silver market is in an almost permanent deficit (see the red line in the table underneath)

When China ended its monetary silver stallion in 1935, the US Treasury bought all the silver they could collect. The US stock of monetary Silver culminated in 1950 at 2,000 Moz. This monetary silver complemented the  gold held by the US Treasury. The rule in 1934 was then that the monetary value of the stock of sliver should not exceed one-third of the value of the gold stock. Interesting ratio, is not it ?

When Nixon halted the « gold Window » in 1971, the OCC used the monetary silver stock to try to maintain silver prices low. As it can be seen on the table,   the government's sales of silver on the market decreased each year to 7.9 Moz in 2013 and since that year to zero. The small remaining stock of monetary silver had been entrusted to the US army as a strategic reserve.

Above Ground Silver stocks

The World Silver Survey 2018  (page 38) says there are  86,651 tons of silver in above-ground stocks.

86,651 tons of total silver above-ground stocks 

49,781 tons in custodian vaults   50% in Asia

20,834 tons in the occidental known ETF  

2,523 tons of government reserves  (2/3 Chinese) 

454 tons of industrial private reserves

At the end of 2017, 13,059 tons were in private vaults purchased by investors waiting for a big rise in the prices of silver.

Silver In ETF

Since the beginning, it seems obvious that the purpose of the silver ETF is to divert the demand of physical silver from investors, providing them an ersatz called silver-paper. 

Lowering the demand for physics allows a better management of silver prices.

The silver stocks of the different ETFs in silver are published ... (How many external audits since their creation ?)

Officially the different ETF accumulated 669 Moz of silver on behalf of investors.  

After the Washington G20 in November 2008 and the willingness expressed by the concert of nations to change the monetary system, Chinese banks had offered their customers to keep their cash in either Yuan or gold or silver via ETFs. This means that every Chinese bank has a stock of gold and silver. Unlike in the West, these Chinese ETFs are officially supervised by the Chinese Central Bank. China has therefore well established a reserve of silver, but whose weight is not revealed.

LBMA

Last year the LBMA promised to publish gold and silver stocks the first day of each month. The last time they did it was in March 2018. At that time, there was    337,86 tons of silver (source ). This includes the SLV silver stock for 9,000 tons.  So there were only about 24,781 tons of silver to sell in the LBMA warehouses.

COMEX

In Comex warehouses, there are 203 Moz eligible (not for sale) and 72,9 Moz registered (for sale at a price defined by the seller). This listed inventory represents only 275 Moz which include JPM's 133 Moz , which a priori are intended for the US Treasury ... and perhaps to be restituted from a lease to China, in fine.

On the Comex, traditionally, there are very few Silver deliveries

Comex Monthly Deliveries

contracts

Mar 2015 2,583

May 2015 2,840

July 2015 3,637

Sept 2015 1,555

Dec 2015 3.939

Total 2015    14.554 contracts of 5000oz = 72.77 Moz     or  2.204 tons

Mar 2016 1,356

May 2016 2,716

July 2016 2,474

Sept 2016 3,215

Dec 2016 3,980  

total 2016 13,741 contracts of 5,000 oz = 68.7 Moz  or 1,947 tons

Between 2012 and January 2018, JPM Bank has accumulated 133 Moz in 6 years, or 22.2 Moz per year. This represents 31.4% of Comex's deliveries.

The COMEX therefore delivers only 47.8 Moz per year or 23.9 Moz per semester

Cornering The Silver Market

Since the beginning of 2018, the COMEX has transmitted to London its delivery obligations in the form of these new EFP.  (Source Harveyorgan )

JAN 2018: 236,87 MILLION OZ

FEB 2018: 244.95 MILLION OZ

MARCH 2018: 236.67 MILLION OZ

APRIL 2018: 385.75 MILLION OZ

MAY 2018: 210.05 MILLION OZ

JUNE 2018: 345.43 MILLION OZ

In just 6 months, these EFP accounted for 1,659 Moz or   47,031 tons of silver.

These 1659 Moz of delivery requests in the first half of 2018 represent 47 times the semi-annual normal at the COMEX. (Or 69 times the normal without JPM stack)

In 2017 Silver mine production had been less than 22,500 tons. These delivery requests represent twice the 2017 production and it is concentrated on only 6 months!!! If this continues, at the end of the year, there will be a delivery request for 4 years of production.

As the mine supply of silver has been in "just-in-time » production for decades, it is almost impossible to deliver such a huge quantity without destabilizing the market.

If there are only 24,781 tons of silver to sell in the LBMA warehouses, how could they deliver 47.031 tons ? 

22,250 tons are missing   that represents 11 months of the 2017’s  mine production  

I had confirmation by my sources, that the first circle of the oligarchy sold their investments in the stock-exchange at the high in January, May and June … and invested that cash heavily in physical silver.  

Not in ETFs like SLV, nor in mining stocks, but in real Physical Silver and they asked for delivery. The delivery could have been requested in Singapore’s private vault, one of the countries where there is no tax on precious metals exchanges.

On the SGE, in 2018, there is no visible anomaly in the delivery requests for the silver leaving the Shanghai warehouses. The demand has been slightly stronger in march and June this year, but nothing as the huge Comex delivery requests.

You can see that in Shanghai, the withdrawals of the second semester are usually much stronger than during the first half of the year.  

The silver seasonality shows that June is usually the weakest month of the year for silver prices

The Silver chart says that the triangle would be closed at the end of October 2018, but for me, the rise should start this summer. 

The Previous Silver Corners

In the early 1970s, the Hunt brothers, who had made their fortunes in oil, panicked at the sight of galloping inflation, since the Federal Reserve had abandoned the defense of the fixed price of gold in dollars. They wondered how to defend their capital from inflation. As in the United States it was forbidden to hold more than a certain amount of gold…they decided to invest heavily in silver. When they started, one ounce of silver was worth $ 1.3. On the last day of the hike, at the end in January 1980, the silver reached $ 50, before the Hunt brother were crushed by the Fed, . What is surprising is that the Hunt brothers and their associates in the emirates had only amassed about 100 Moz of physical silver (source wikipedia). Beside of that, they had bought all the futures contracts on the markets, which they had to sell with huge losses, because of margin calls.

In October 2009, China banned the export of silver, depriving the market of approximately 154 Moz  blocking JPM in a short-squeeze by not delivering the silver sold by China through Bear Stearns. This caused the prices to skyrocket in 2010 and 2011. The silver price climbed from 14,67 to $ 49. In May 2011, the CME changed the rules to crash the speculator with 5 successive margin calls… exactly like in 1980.

At the beginning of 2009, when the silver was at $ 14.67  the whole silver market was worth about 13 billion dollars.

Between January and June 2018, the first circle of the oligarchs asked delivery of 1,659 Moz that they bought for 27.3 Billion Dollar. They started buying all the physical silver available on the market. 

When the second circle of insiders will be informed of this extraordinary opportunity, there will be a rush of new investors and hedge funds, who will try take advantage of the windfall. Billions of dollars will be invested in a very small market. It is likely that a majority of this capital will be invested in ETFs, trackers, warrants or mines. I think could be a deadly trap because of the hike to come in margin calls.

On July 6th, Andrew Maguire confirmed this move of the smart money  on KWN 

  “We are also evidencing a large move to allocate and remove gold and silver from the interconnected legacy banking system. This is creating a supply shortage ahead of season."  

After those insiders, the web will probably make more and more noise on the future rise of silver and all the small speculators will rush in  trying to get their hands on a few coins. But already this early demand of the smart money should cause an exponential rise in prices. 

Since June 2018, Everything Had Changed

13.059 tons were in private hands at the end of 2017, but the first six months of 2018 saw 47.031 tons added in the private vaults.  

There are now 61.924 tons of silver in private vaults, 75% of the the above-ground silver stock waiting for a rise in the prices of silver or organizing it through a shortage and a short-squeeze

And the year is not even finished

5 years of silver mining production are in private hands  and there is only 12 years of underground silver reserves. 

RESET

In 2018, those who are cornering the market are not just anyone, like in 1980. I believe they are the Masters of the Money, a few dynasties of bankers, who direct the monetary system. They do not try to make a single financial blow. They are implementing the new world monetary order. This new monetary system was requested by China in November 2008 at the G20 Washington and was then formalized by a brief letter, which you can read on the site of the BIS  which is today known as the Central Bank of Central Banks. The governor of the Chinese Central Bank demanded that the Dollar be abandoned as the currency of international trades, because it is too tempting for a nation to take advantage of its currency to the detriment of other nations, and try to put in place the system proposed by Keynes to Bretton Woods: the Bancor.

The Bancor  is a very fair system, where nations are forced to balance their trade balance, on one hand , and where the international currency is constituted by a basket of currencies (like the SDR), guaranteed by a basket of 30 commodities representatives (Chapter II, paragraph 1). This information has been retracted almost everywhere on the internet, but this document issued by China restores the truth.

Generation after generation,  everything has been done to erase  the monetary reality of silver  from the collective memory, but  Xia Bin, one of the leaders of the Chinese Central Bank, said in an interview with China Daily in January 2011: "China needs to strengthen its gold and silver reserves". Have you ever heard Greenspan, Bernanke or Yellen speaking of silver reserves? 

In the history of humanity, gold and silver have always been monetary references. Gold / Silver ratios have often fluctuated from one continent to another and from one era to another. When European mines were exhausted in the late fifteenth and sixteenth century, the gold / silver ratio was 1/10 in Europe against 1/5 in China. The bimetallic monetary system set up by the French Convention in 1795,  set a ratio of 15.5, which will remain the international reference until the First World War.  Today, the ratio fluctuates according to the manipulations of the market. But if you look at the data published by the USGS year after year on gold and silver

When the world gold production is 2,500 tons, the world silver production will be  evaluated to  25,000 tons. The ratio is 1/10

When  the world's gold reserves are estimated to 50,000 t, the world's silver reserves is calculated to  500,000 tonnes, the ratio is 1/10

All figures produced by the USGS are false, but they wrote those numbers, year after year on the same ratio basis:  1/10  I conclude that this ratio has been for decades a  political will.

This political will has been reflected in these coins hit by the US Mint in 2007 and 2008, which had been revealed by a whistleblower to the net community. The Ameros were supposed to become the domestic currency of the NAFTA Zone (USA, Mexico, Canada) like the EURO for the European Union. As seen on these coins, weighing one ounce of gold and one ounce of silver, their face value respected  the 1/10 ratio

The Masters of the Money  are cornering the silver market. It is one of the step to the New Monetary Order. The new silver price will have nothing to do with chance, but will be part of the passage to the NWO negotiated since November 2008 during the G20 and behind closed door.

In February 2014, at the Forum of Davos, Christine Lagarde spoke at length about the RESET.  The following weeks, Jim Willie's source revealed the ongoing SDR negotiations.  According to Jim Willie’s source, The Voice, who has shown in recent years to be quite well informed ... "in the future DTS the Dollar and Euro shares would decrease sharply to give way to a jump seat for the Russian Ruble, for the Chinese Yuan and a significant 20% for precious metals. There could be a small unallocated share, which could be oil, but it was not told in the song. » citation from my memory

What will be the gold/silver ratio in this future DTS ?  For me, It should be 1/10

As we know, the barons of the US financial Empire blocked the reforms as long as they could. It took the IMF member nations to issue an ultimatum to the Congress, so that finally the agreements signed by Obama at the time of the financial G20s should be countersigned. The Chinese Yuan got a jump chair in the DTS and the Chinese monetary authorities some votes on the IMF's board of directors.  This SDR with gold, silver and the Russian Ruble could be voted in October 2020.

The Gold-Silver ratio which is at 1/78 today will crash severely  in the 3 years to come.

What price for silver?

The Rise Of Silver Can Be Slow Or Very Brutal 

A slow rise will already be surprisingly fast. 

Refer to the 2010-2011 graph. In September 2010, Silver broke the resistance, which had held for 2 years. Then the pricess rose from $ 18 to $ 50 in just 6 months, jumping from a Fibonacci Fan to the next.

The rise will go faster and faster when the 50$ level will be broken.

A Brutal Rise

The COMEX Rule N° 589, which entered into force on 22 December 2014, could be applied.

Let’s suppose, that Silver price is 16$.  At some point nobody will want to sell its physical Silver. Buyers will then be forced to raise the auction. After a rise of $ 3, the market will be stopped 2 minutes to let buyers and sellers negotiate. Then the market resumes, the auction goes up by $ 3 ... etc.  When the threshold of $ 12 rise in the day will be reached, without anyone wanting to sell physical silver, the market will be closed. And there will be no fixing for that day.  Without a fixing, nobody will be able to buy or sell silver in the world till the next fixing.

The second day, the silver market opens at $ 28.  But nobody agrees to sell physical silver at this price ... so as the day before, the price rises by $ 12 … but there is once more no fixing.

In 2 weeks, 10 business days of trading, courses will increase from $ 16 + $ 120 = $ 136.   … Have fun and do the math by yourself.

And during this entire period without fixing, no one will be able to buy or sell silver in the world.

-----

This rule has been created for something, is not it ?  Did they create this rule to solve the problem of a future Big Corner ?  ;-)

Israel Friedman Wrote In 2006

Only a shortage in physicals can bring high prices and defeat the paper market and force the naked short sellers into bankruptcy.

Price Points and the Coming Silver Squeeze

To define what I mean by shortage in silver, I say categorically that I’m not interested in the level of world inventories of silver, COMEX inventories and the guru’s stories. I am only interested to know if the users are receiving their shipments of silver on time. When a delay of silver shipments occurs, and affects most the users, I will consider this as a shortage.

Let’s see the stages of a shortage. 

1) Pre-shortage – the users will have to wait 3 to 6 weeks extra for shipments. Then the prices can rise to $20-30/oz.

2) Shortage – the users will wait an extra 6 weeks to 4 months for silver. Then the prices can rise above the old all-time highs of $50/oz.

3) Super shortage – the users have to wait more than 4 months for their silver shipments. The price will range from $100 to prices you won’t believe. 

If this last scenario occurs, and gold has plenty of supply, the price of silver, at a minimum, will equal the price of gold. And my crystal ball tells me that silver can exceed the price of gold by a great deal.

You should be asking, how did I calculate the prices for the different stages?

My calculation is very conservative. I only take into consideration the future deficits between the producers and users, which is running currently at around 50 million ounces annually. I also take into consideration that private investors have 400 million ounces in bullion and coins that they will sell in some stages. 

-In stage one, pre-shortage, I think investors will be willing to sell 50 million ounces at a price between $20 to $30.

-Stage two, shortage, investors will sell 200 million ounces between $30 and $100.

-And the remaining 150 million ounces will be sold in stage three, super shortage and the prices will be truly shocking.

These prices are very conservative, in my opinion, because they don’t take into consideration the naked shorts, new investments, or those banks worldwide that sold silver certificates without real silver backing, only derivatives backing.

The Shortage Is Here

In the weeks to come, you should have many articles to read about the growing delays in delivery of silver.

The first leg of this silver bull market is about to be launched. For me, there will be 3 big waves in the years to come. The last one should be a tsunami, and create the biggest bubble in History. 

At the moment, let’s enjoy the first wave.  

It is the calm before the tempest.

Cyrille Jubert 

Author of Silver throughout history. French Precious metal analyst and chronicler 

The symbol for silver ‘AG’ comes from the Latin word ‘agentum’ meaning silver.