A shortage of available metal in the London market helped push silver prices to a premium to U.S. Comex futures a week ago, making air deliveries – usually reserved for much more expensive gold – profitable for sellers.
“The biggest pressure is behind us for now,” said Tai Wong, an independent metals trader. He estimated that about 15 to 20 million troy ounces (311 to 467 tonnes) of metal had arrived in London from the US over the past week.
SILVER PRICES, LONDON LOAN RATES BOTH SET RECORDS
Another source familiar with the matter said at least 1,000 tons of silver had gone to London vaults from the US and China.
As the London market squeeze coincided with rising gold prices and strong buying in India, the benchmark price for silver hit a record $54.47 per troy ounce on Friday. On Monday they were just under $52. [GOL/]Meanwhile, short-term silver interest rates in London fell on Friday from record highs seen on October 10. The London vaults contain 24,581 tonnes of both committed and uncommitted silver, valued at $36.5 billion, as of the end of September, according to the London Bullion Market Association.
Most London stocks are “cherished” by silver-traded funds, according to Morgan Stanley commodities strategist Amy Gower.
Consultancy Metals Focus estimates that at the end of September, 83% of the silver in the London vaults was allocated to ETFs.
About 697 tonnes of silver have left Comex warehouses in the US since inventories there reached a record high of 16,543 tonnes (531.9 million troy ounces) on October 3.
Comex inventories rose earlier this year due to uncertainty over US import tariffs. Further interest in outflows from US equities depends on the results of a US investigation into possible import duties on crucial minerals, which the market expects this month.
UK COMPETES WITH INDIA FOR SUPPLY
A China-focused precious metals trader said about 100 to 150 tons were on their way last week from China, the world’s second-largest silver producer after Mexico.
Not all the Chinese metal went to London, he said, because Britain had to compete with India, the world’s biggest consumer, which is also experiencing a shortage of available supply due to the holidays.
“Premiums in India have risen to unprecedented levels, leading to an increase in air freight,” Metals Focus said.
Silver inventories in warehouses controlled by the Shanghai Futures Exchange fell 249 tonnes to 920 tonnes last week, the lowest since May. That was the largest weekly outflow in eleven years.
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