Paper Vs. Physical: The Amazing Amount Of Leverage In The Silver Market

Tyler Durden's picture

Authored by Steve St.Angelo via,

While many precious metals investors realize the massive amount of paper trading leverage taking place in the gold market, they should see what is going on in the silver market.  In a previous article, I provided data showing that an amazing $9.8 trillion of notional gold paper trading took place on the world’s exchanges in 2016 versus $42 billion in actual physical gold investment.  This was a paper to physical ratio of 233 to 1.

However, the amount of paper trading leverage in the silver market is much higher than that.

But, before I get into the specifics of the paper silver market trading leverage, let’s take a look at the pathetic amount of physical silver investment versus Central Bank asset purchases.  According to the data in the recently released 2017 World Silver Survey, total physical silver investment for 2016 came in at a whopping $4.4 billion:

That’s correct.  When we add up all the global silver investment demand last year, it adds up to a measly $4.4 billion.  It was nearly ten times less than all physical gold investment in 2016.  The analysts who wrote 2017 World Silver Survey, arrived at the $4.4 billion figure by using the following data:

Global Silver Investment 2016 (in million oz – Moz):

Physical Bar Investment = 83.6 Moz

Official Coins & Medals = 123.2 Moz

ETP (ETF) Inventory Build = 47 Moz

Grand Total Silver Investment = 253.8 Moz

By adding up total Physical Bar investment of 83.6 Moz, Official Coins & Medals of 123.2 Moz and ETP (ETF) Inventory Build of 47 Moz and then multiplying it by the average silver spot price of $17.14, it totaled $4.4 billion.

Even when the silver price reached a high of $49 in 2011, total global silver investment was only $6.6 billion.  Looking over the market in the past six years, the total $32 billion of silver investment from 2011 to 2016 is nothing when we compare it to the staggering amount of Central Bank asset purchases.  According to a recent Zerohedge article, Why “Nothing Matters”: Central Banks Have Bought A Record $1 Trillion In Assets In 2017:

A quick, if familiar, observation to start the day courtesy of Bank of America which in the latest overnight note from Michael Hartnett notes that central banks (ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record.


Now, if we look at the chart above, Central Banks purchased $7 trillion (that was made public, could be higher) from 2011 to 2016.  If the Central Banks purchased $1 trillion in just the first foru months of 2017 versus the $7 trillion from 2011-2016, something seriously wrong must be going on in the markets.

Regardless, $7 trillion is a lot of money when we compare it to the pathetic $32 billion invested in silver over the same period.  If we just took $100 billion of that $7 trillion and placed it in silver, it would have quadrupled the amount of global silver investment from $32 billion to $132 during that 2011-2016 time period.  A quadrupling of silver investment demand, would have pushed the price of silver, WAY ABOVE the peak $50 price.

By the Central Banks propping up the STOCK, BOND and REAL ESTATE markets, the value of silver (or gold) is being severely depressed.  And of course, to keep investors from finding out about SILVER’S HIGH QUALITY STORE OF VALUE, the price continues to be capped by the massive amount of paper trading leverage.

So, how much paper trading leverage is in the Silver Market?  Let’s look at the following chart:

Again, according to the data put out by the 2017 World Silver Survey, total paper trading silver volume on the world’s exchanges was 159,000 Moz, or 159 billion oz in 2016.    Thus, the exchanges traded 180 times more paper silver in 2016 than the global mine supply of 886 Moz.

If we look at the ratio of global notional paper silver traded last year compared to actual silver investment, it was more than double that of gold:

By multiplying the 159 billion ounces of paper silver traded in 2016 by the average spot price of $17.14, we arrive at a staggering $2.27 trillion of notional paper silver traded versus $4.4 billion actual silver investment.  Thus, the paper notional silver trading ratio to physical silver investment was a whopping 517 to 1… double the 233/1 for gold.

Now, this 517/1 notional paper trading ratio to physical silver investment in 2016 does not take into account any of the huge OTC market where a lot of silver is traded and there are no quantifiable statistics to the amount or degree.

Currently, the crypto-currencies are experiencing huge gains over the past several months.  It doesn’t matter if an individual agrees with owning Bitcoin or one of the many crypto-currencies, the important thing to understand is that the tremendous price increases in many crypto-currencies are likely due to concern to the massive amount of Central Bank $1 trillion in asset purchases in the first four months of the year.

Furthermore, crypto-currencies are a likely a GOOD INDICATOR of what will take place in the gold and silver market when investors realize most STOCKS, BONDS and REAL ESTATE values will continue to implode as the U.S. and Global Oil Industries disintegrate.

The gold and silver prices are being capped because paper contracts can be added as more funds move in.  However, crpyto-currencies do not have this problem because the amount of Bitcoins, as an example, are limited.

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Raffie's picture

Silver is the new paper gold.

Shlomo Scheckelstein's picture

Buy paper silver and paper gold, we shall supply.

Shlomo Scheckelstein's picture

supply and demand? no problem we just invade an infadel country.

NoDebt's picture

"The gold and silver prices are being capped because paper contracts can be added as more funds move in.  However, crpyto-currencies do not have this problem because the amount of Bitcoins, as an example, are limited."

Oh, you got me, you bastard.  I read it all the way through and got nailed at the end.

Do you think there won't be "paper" bitcoin contracts some day, if they don't go the other way and just outlaw bitcoin?



Oracle of Kypseli's picture

Same here. He is saying invest in CC's and abandon silver. Silver is an industrial commodity and it will always have value. CC's are ethereal. Here today, gone tomorrow. Notice the euphemistic name of a new CC called ethereum? How telling!

adanata's picture

Moreover, the "ransomeware" just killed crypto... you gonna put all your eggs in that basket?!?  phyzzzzzzzz all the way.

BullyDog's picture

That final statement was the Silver lining in the cloud, I mean trojan horse.  :)

Crash Overide's picture

I thought the game was to hedge?

Why is everyone so butt hurt about crypto's, is it because FED paper, silver paper, stock paper, derivatives, etc... are so awesome? 

meta-trader's picture

she was a waitress in a cocktail bar now she owns a jet...

Harlequin001's picture

FFS, Come on Tyler, get rid of this wanker will you, it's on every fucking page.

NotApplicable's picture

I'm thinking that bitcoin itself may not be outlawed, but individual wallets will be indicted and charged with any crimes they're used in.

WannaCry perpetrators, beware!

Muddy1's picture

Which is why at the moment gold is up 1.54%, and silver is up a stunning 0.12%.

meditate_vigorously's picture

The current ratio of gold to silver closely resembles the estimated abundance of each here on planet Earth.

I would not expect that ratio to change much. Historic correlations do not factor in the scientific discovery of elemental abundance on the planet.

The only thing we are left with then, is the use of PMs as money or a store of value for future money.

When the currencies collapse, they will no longer be pegged to the currency, so it is unlikely there are any windfalls. The historic currency collapses left a window of hyper-inflation where real assets and dept could be acquired with phys. Again with technology, that window may be quite small if it happens at all when the next currency collapse hits. So, phys should not be relied upon for a windfall.

OverTheHedge's picture

So what you are saying is, if the current currencies collapse, then gold will be valued at the same false, marked-down price, but in the new currency instead. I'll take that as a win, frankly. Just keeping value will be fine, given that euros, pounds and dollars won't be allowed to be used as lavatory paper.

LawsofPhysics's picture

Yes, apparently endlessly...


Remember, when fraud is the status quo, possession is the law...

yogibear's picture

The roaches will scatter if the Ponzi is exposed.

Give Me Some Truth's picture

The roaches will be squshed. And they know it. And so they will do EVERYTHING to keep from being "exposed." Their life(style) depends on this. Bottom line: Manipulating the monetary metal markets is the MOST IMPORTANT thing they do. This needs to be understood by a lot more people

Idaho potato head's picture

everyone has a plan, until they get punched in the face.

M Tyson

EmmittFitzhume's picture

Everything coming from wall street is a ponzi now

Shlomo Scheckelstein's picture

We call it a kaiser Madoff II pyramid construction in the synagogue when we hold our sjabbat.

This is it's picture

This srs is nothing but hogwash fantasy wishful thinking. All the hopium is based on "if only... " 

Wake up, the world is real. 

LawsofPhysics's picture




Raffie's picture

No LOL'ing at the Stawk Mockets

abyssinian's picture

guess no one needs physical delivery so why not keep selling fake paper silver?

LawsofPhysics's picture

"because the amount of Bitcoins, as an example, are limited" ---   LMFAO!!!!!!!!!



"Full Faith and Credit"

Nice Try Lao Che's picture

JFC ~ Usually it takes a Clinton to come up with a horseshit comment like that.

Note: I'm agreeing with you on the idiocy of the authors comment, not yours.

Raffie's picture

Iirc wealth is based on rarity and how much energy it takes to obtain said product gold/silver/btc.......

Right now there is 1,000oz of gold per Biotcoin.

Takes lots of energy to mine 1 Btc and the difficulty in the next coin gets harder. That is why they do not expect to have all 21million coins mined something around 2030-2040.

BTC is backed by faith it is real money. The USD is backed by gold (more like FAITH that there is gold backing it)

Considering the day and age we live in why not have physical and digital? Covers the bases better. I have bought in BTC when it was $920 and ETH when it was $18. That is my skin in the digital game and out of the banking system.

PM true value does not shine till its all coming down like Venezuela. We will get there, but right now why not digital, make some good cash and buy long term food and PM? 

So doing my way you can buy a lot more PM in the future then banking system and buy PM since you making nothing in the bank.

So at the very least, do some homework on BTC, and watch videos on it.


Bay of Pigs's picture

The USD lost any gold backing it had back in 1971.

Raffie's picture

I want a 3rd party to take inventory of the gold the US is holding.

Think they will not do that because all they will find is some gold dust in the corners of vault where the gold used to be.

Think last inventory was when FDR had the gold put into Fort Knox.

Bay of Pigs's picture

Yes. And more than likely all that gold, if it does exist, has multiple claims on it via the leases and swaps brought in by people like Robert Rubin.

Raffie's picture

They have 'loaned' out the gold to make big side money.

Trouble is the countries that barrowed it, sold it to their people and a lot of it have been made into jewlery.

Its a big mess for sure.

Look at Germany. We gave them back gold that was not their gold. Wrong stamps and S/N's as well.


Give Me Some Truth's picture

When we audit the Fed, let's also audit the gold. The two go together after all. Oh wait, we will never audit either. This tells us everything we need to know about the real prospects of "draining the swamp."

Nice Try Lao Che's picture

"Takes lots of energy to mine 1 Btc and the difficulty in the next coin gets harder"


So basically, it sounds like I should be investing in coal.

Raffie's picture

So your point also implies to PM as well.

Just saying...

Nice 5d new alt troll account u got there as well.

Grosvenor Pkwy's picture

A better analogy would be to invest in coal ashes, since the "energy" of bitcoin is energy that has been burned up and gone forever.

PlayMoney's picture

with the amount of gold we have, probably very little, there should be 100+ owners/leasers of every ounce. Nothing to see though....move along.

Raffie's picture

Last I seen months ago was over 500 paper Korntracts per ounce of gold.

meditate_vigorously's picture

No doubt they would find a lot of gold plated tungsten.

Raffie's picture

hehe YUP... sure that pissed Germeny off big time.

I'd be mad as hell over something like that.


adanata's picture

The west has little gold... but the Rothschilds have plenty. If it suits them, they may 'lend' the US gov. sufficient gold to back an international dollar whilst giving the Sheeple a devalued 'Treasury Note'...  Their aim for the peasants is digital so the sequentially devalued note will lead eventually to hyperinflation, chaos and possibly digital assets that can be confiscated at will. We're certainly going to find out just how intellectually limited [or not] the American public really is. I mean, even common sense should be causing red flags to be flying around everywhere... even for the average person... we'll see.

QE49er's picture

Bitcoin is a ponzi scheme

tmosley's picture

You should learn the meanings of words before you try to use them.

Raffie's picture

Peeps just don't do any research on anything and just assume they got the answer.

I find remarks like his MILDLY AMUSING.

I'm making good money in BTC/ETH. Going long in both and mass countries adopting it.

Kind of hope the ETH ETF passes. Will rock the price hard dues to leveraging. At that time I might sell and buy more BTC.

My investment have over doubled since I invested in Feb 2017. Banks are a joke.

Bay of Pigs's picture

I'm actually happy for you guys here who have made some good money on BTC. I never bought it but don't feel the need to bash the people who use it and hold it. Just not my thing.

QE49er's picture

It's the "CyberChrist", don't even think about bashing it, or else...

Raffie's picture

You provide NO PROOF at all of what you are saying.

U just toss a label on it and run away in hope it takes.

So where is your proof?

Raffie's picture



Where to setup your bitcoin account to buy/sell

Bitcoin & Ethereum Wallet - Coinbase Buy and Sell digital currency. Coinbase is the world’s most popular way to buy and sell bitcoin and ethereum.

The wallet I like to hold Bitcoin offline to guard it. When you set the wallet up I do standalone and default setting.

When you 1st setup the wallet you will be given a SEED phrase that contains 12 random words (IF YOU LOOSE YOUR SEED, EVERYTHING IN THE WALLET IS GONE FOREVER) once you make multiple copies of the SEED you will put in a password. The password is only needed to SEND out Bitcoin from the wallet or to see the SEED. If your PC gets wiped out, you can download the wallet and RECOVER A SEED with that phrase to restore your Bitcoins.

I use this wallet because it seems to me the best one out there.

Bitcoin News Links I use -

CoinDesk - Bitcoin News, Blockchain News, Prices, Charts ... CoinDesk is the world leader in news, prices, and information on bitcoin, blockchain technology, and other digital currencies.

News - Bitcoin News Daily news about bitcoin and cryptocurrencies. Original news stories from

Cointelegraph Bitcoin & Ethereum Blockchain News Bitcoin & Ethereum news, analysis and review about technology, finance and markets - Future of Money and FinTech news.

CCN: Bitcoin, FinTech, Blockchain & Cryptocurrency news Providing breaking Bitcoin & FinTech news - focusing on blockchain technology, smart contracts and cryptocurrencies.

Site to buy Gift Cards with Bitcoin

Gyft | Gift Cards Made Easy Gyft is the best way to buy & send gift cards online for retailers like Amazon, Starbucks, and iTunes. Use the Gyft mobile app to balance check gift cards.

On Coindesk you can buy Bitcoin and Ehtereum

Here is the link that explains the difference between the 2.

A beginner’s guide to Ethereum – The Coinbase Blog A beginner’s guide to Ethereum. What is Ethereum? According to the Ethereum website, “Ethereum is a decentralized platform that runs smart contracts.”

You can not store Ethereum on your wallet for Bitcoin.

So here is hardware wallet you can store multiple kinds of cryptocurrencies. I got this one since I have some Ethereum tokens as well as Bitcoin. I have the Nano S

Ledger Wallet - Hardware wallets - Smartcard security for ... Ledger Wallet is a Bitcoin hardware wallet which allows users to send, receive, and securely store their Bitcoins.

Bitcoin in a nutshell, there be only 21million Bitcoins EVER. Currently there is over 16million coins mined.

Each Bitcoin breaks down into 10million units.

There is many videos on Blockchains that all cryptocurrencies are based on and how they work.

America has the most Bitcoin ATM's ion the world.

China is the biggest user of Bitcoin (for now)

Japan said April 1st 2017 it recognizes Bitcoin as legal tender and is excluded from taxes.

Russia looking to allow Bitcoin in 2018.

Bitcoin is listed in the FOREX market which is amazing.

Maestro Maestro's picture

Worse than the bankers rigging gold and silver prices and not having the gold that they sold you (or selling gold that they don't have via fraudulent COMEX Futures contracts) is the fact that we don't even have MONEY today.  Therefore all financial transactions and economic numbers predicated on the existence of money are FRAUD and FORGERIES presently.

Electronic digits and paper fiat currencies in use today are NOT money, according to the law of the country that issues the reserve currency of the world, the US Dollar (Article 1, Section 10 of the US Constitution); or by the tenets of the science of Economics (i.e., fiat currencies are not money because they are not a store of value nor a unit of account due to the fact that NOT ONE fiat currency's value is actually determined or stipulated in concrete legal terms).  Dollars and Euros and Yens are not even lawfully DEFINED as to what they all are exactly; what their economic worth and transactional value is. Hence, fiat currencies simply cannot constitute the legal foundation of any lawful contract!

(Also, there cannot be either inflation nor deflation in the ABSENCE of money.  Both inflation and deflation are monetary events which cannot take place where there literally is no money.)

What we have today is massive GLOBAL FRAUD mascarading as a monetary system based on the (fraudulent) US dollar because all fiat currencies are basically only a derivative of the US dollar, including the Euro, the Yen, the Yuan, the Rouble, the Shekel and the Riyal.


Why do a few people get the right to print fake fiat money out of nothing and buy your goods and  services with it whereas you have to WORK to obtain the same worthless money created out of nothing?

THAT is the question at the heart of the matter.  That the bankers manipulate interest rates or the price of gold via fraudulent Futures trading (by selling gold that they don't have) with fiat money is a moot point.

To put it differently: why do the bankers get to have anything that they want without working for it and you, you don't?

All this talk about market rigging, monetary theory and fraudulent (paper) gold trading is a cover-up for INJUSTICE.

The US Constitution FORBIDS the use of debt as money; the US Constitution proscribes (debt) notes which is what the US dollar is presently.  Think, all other currencies are just another name for the US Dollar.

What passes for money today is a CRIME, no more no less.


You are all aiding and abetting this crime every time you buy, sell, pay or get paid.

And then you ask, Why our leaders, the politicians, the bankers, and our military men and women are EVIL?

The answer is, because they are just like YOU. They are your sons and daughters.

1952angus's picture

Maestro Great comment spot on