Unveiling the Silver in the LBMA London vaults

BullionStar's picture
Submitted by Ronan Manly, BullionStar.com
 
Sometime in the coming days, the London Bullion Market Association (LBMA) plans to begin reporting the amount of real physical gold and silver that is actually stored in the network of LBMA vaults in London. This follows an announcement made by the LBMA on 8 May.
 
There are 7 commercial vault operators (custodians) in the LBMA custodian vault network namely:
 
 
Note that ICBC Standard Bank has a precious metals vault in London which is operated by Brinks on behalf of ICBC Standard. It is also quite possible that some of the HSBC vaults, such as the famous GLD gold vault, are located within Brinks facilities.
 
Adding in the Bank of England gold vaults under the Bank of England’s head office in the City of London, the LBMA vaulting network comprises eight sets of vaults. However, the Bank of England vaults do not store silver, or at least there is no evidence that the Bank of England stores silver. However, the other 7 vault operators can and do store silver, or at least most of them do.
 
The forthcoming LBMA vault data will represent actual physical gold and silver holdings, i.e. real tangible precious metals, as opposed to the intangible and gargantuan paper gold and paper silver trading volumes generated each day in the London precious metals markets.
 
The LBMA will report physical holdings data on an aggregated basis for each of gold and silver, i.e. one quantity number will be reported each month for vaulted gold, and one quantity number will be reported each month for vaulted silver. The LBMA data will be on a 3-month lagged basis.
 
The uncertainty as to when the LBMA will begin to publish its vault holdings data is purely because the LBMA has not provided a specific publication commencement date. At first, the LBMA announced that the reporting would begin “in the summer”. Subsequently, it announced that it’s vault reporting would begin in July.
 

Reported and Unreported Silver

 
Although gold usually generates the most headlines, it’s important not to forget about silver, and the fact that this new LBMA reporting will also provide a monthly aggregated total for the amount of physical silver held in the LBMA vaulting network in London. The silver stored in these LBMA vaults is in the form of London Good Delivery silver bars which are variable weight bars.
 
The recommended weight range for a Good Delivery silver bar is between 900 troy ozs and 1100 troy ozs, however, these bars will often weigh in the region of about 1000 troy ounces each. The minimum purity of a London Good Delivery silver bars is 99.9% pure silver. For example, a Heraeus silver bar currently the BullionStar website weighing 947.75 troy ounces is an example of a Good Delivery silver bar.
 
Since silver has a lower value to weight ratio than gold and is bulkier to store, silver a) takes up more room than gold and b) can be stored in secure warehouses rather than the ultra-high secure vaults which are used to store gold. This is particularly true in expensive cities such as London where it is more economical to store silver in out of town locations which have lower commercial rental values.
 
In the LBMA vaulting network, London Good Delivery silver bars are stored in an arrangement of 30 bars per pallet, i.e. a formation of 10 bars stacked 3 bars high. Since each bar weighs approximately 1000 oz, each pallet will weigh about 30,000 ozs, i.e. each pallet will weigh about 1 tonne.
 
 
Even though these LBMA vault numbers are not yet published, it’s still possible to estimate the minimum amount of silver currently held in the LBMA London vaulting network for the simple reason that many of the world’s silver-backed ETFs hold their silver in the vaults of London-based precious metals vaulting custodians, and most of these ETFs publicly report their silver bar holdings on a daily basis. 
 
These ETFs also undergo twice yearly physical audits by independent auditors and publish weight lists which are helpful in pinpointing who the custodians and sub-custodians are, which locations these silver ETF’s store their silver in, and how much silver (in silver bar form) is stored in each location.
 
There is also additional silver held in the London vaults above and beyond the silver bars allocated to ETFs Some of this additional silver falls under what Thomson Reuters GFMS classify as ‘Custodian Vault‘ silver, which is silver that is basically in an ‘Unreported’ category but which Thomson Reuters GFMS finds out about through its own ‘proprietary surveys’ and ‘field research’. 
 
This ‘Custodian Vault’ silver probably accounts for a substantial amount of silver in the London vaults. However, it is difficult to know because GFMS does not provide granularity on its numbers but rolls it up into an overall ‘Europe Custodian vaults’ number. 
 

Silver ETFs

 
The silver-backed ETFs that hold silver bars in the LBMA vaults in London are as follows:
 
  • iShares: 1 ETF
  • ETF Securities: 6 ETFs
  • SOURCE : 1 ETF
  • Deutsche Bank: 3 ETFs
 
Between them, these four providers offer 11 ETFs that hold some or all of their silver in LBMA London vaults. This silver is held with custodians JP Morgan and HSBC, and with sub-custodians, Brinks and Malca Amit.
 

iShares - SLV

 
The iShares Silver Trust, ticker code SLV, is the world’s largest silver-backed ETF.  It’s probably best to think of SLV as the silver equivalent of the mammoth SPDR Gold Trust (GLD).
The custodian for SLV is JP Morgan Chase Bank (London Branch), and Brinks also acts as a sub-custodian for SLV. SLV holds silver in vaults across two Brinks vaults in London, one JP Morgan vault in London, and one JP Morgan vault in New York.
 
As regards Silver ETFs, SLV is the motherlode, and as of 29 June 2017, SLV reported that it was holding 348,841 Good Delivery silver bars containing a total of 339.89 million troy ounces of silver, or a massive 10,572 tonnes of silver.
 
The actual SLV bar list, which is uploaded to a JP Morgan website every day in pdf formatcan be seen here, but be warned that the file is about 5370 pages long, so there’s no real need to open it unless you are curious. A screenshot of the top of the first page looks like this:
 

ETF Securities – 6 ETFs

 
ETF Securities likes to make things complicated and operates 6 ETFs which hold silver bars which are stored in the LBMA’s London vaulting network. Of these 6 ETFS, three of them just hold silver. The other three are precious metals baskets which hold ‘physical’ gold, silver, platinum and palladium. Two of these ETFs are domiciled in the UK, 2 are domiciled in Australia, and the other 2 are domiciled in the US. In each of the UK, Australia and the US, ETF Securities offers 1 silver ETF and 1 precious metals basket ETF.
 
The 2 UK domiciled ETFs, with codes PHAG (silver) and PHPM (precious metals basket), are positioned under a company called ETFS Metal Securities Limited (MSL). The 2 ETFs domiciled in Australia, with codes PMAG (silver) and PMPM (precious metals basket), fall under a company called ETFS Metal Securities Australia Limited (MSAL). The final 2 ETF Securities ETFs, which are US domiciled, are SILV (silver) and GLTR (precious metals basket).
 
MSL stores its silver bars in London with custodian HSBC and sub-custodian Macla_Amit. MSAL stores its silver bars in London just with HSBC.  The US domiciled SILV (ETFS Silver Trust) stores its silver with HSBC in London while GLTR (ETFS Precious Metals Basket) uses JP Morgan as custodian of GLTR but also Brinks as a sub-custodian.
 
Overall, these 6 ETFs store 88,804,195 ozs of silver (2762 tonnes) in London vaults.
 

SOURCE ETC

 
A silver-backed ETF called Physical Silver P-ETC, which is offered by the ETF provider ‘SOURCE’ holds its silver bars in a London vault of JP Morgan. Note, ETC means ‘Exchange Traded Commodity’ and the SOURCE ETF platform was originally established in 2008 as a joint venture between Goldman Sachs, Morgan Stanley, and Merrill Lynch. The latest weight list for the Physical Silver P-ETC states that it holds 3,129,326 troy ounces of silver (97.34 tonnes).
 

Deutsche Bank db ETCs

 
Finally, Deutsche Bank runs 3 ETCs that supposedly are backed by physical silver. These are called “db Physical Silver ETC”, “db Physical Silver ETC (EUR)” and “db Physical Silver Euro hedged ETC”. The custodian for these 3 ETCs is Deutsche Bank, but the sub-custodian, where the silver bars are supposedly held in JP Morgan Chase Bank in London.
 
I say supposedly, because nowhere on the Deutsche Asset Management ETC website are there any silver bar weight lists or recent audit documents relating to the silver that’s supposed to be backing these 3 Deutsche ETCs. These ETCs issue units which each had an initial ‘metal entitlement’ of 10 ozs of silver, but these entitlements are now a bit less than 10 ozs due to what looks like fees having been offset against the ‘holdings’. Based on the entitlement calculations, these 3 ETCs supposedly hold about 14,868,312 troy ounces of sivler, which is 462.5 tonnes. Workings in full article.
 

Total ETF Silver held in London LBMA Vaults

 
Adding up the silver held in the 11 ETFs profiled above yields the following table. In total, the 11 ETFs hold approximately 12,041 tonnes of silver (387.2 million troy ounces) across 4 vault operators in London. Brinks vaults hold 48% of the total, and JP Morgan vaults hold another 30%. Of the remainder, HSBC and Malca Amit hold about 11% each.
 
ETF Silver Holdings – Tonnes, for Silver stored in London LBMA Vaults
 
In terms of London Good Delivery silver bars, these 11 ETFs hold approximately 400,000 of Good Delivery silver bars. Since the 3 Deutsche ETFs (ETCs) don’t have an available bar list, the assumed troy ounce holdings have been converted to bar totals by assuming each bar held weighs 1000 ozs. 
 
Brinks stores over 191,000 of these Good delivery silver bars. That equates to nearly 6,400 pallets with 30 silver bars per pallet. If these pallets were stacked 6 high, and arranged in a square, it would be an area 32 pallets long by about 33 pallets wide. In addition, Brinks may also store silver on behalf of HSBC, or even on behalf of JP Morgan. Who knows?
 
Number of ETF held Good Delivery Silver Bars stored in London LBMA vaults
 

Thomson Reuters GFMS – “Custodian Vault” Silver

 
Finally, in addition to these ETF silver bars holdings in London, there is also silver held in these London vaults but which is not reported – i.e. unreported holdings. Even though this additional silver is not reported by its holders, Thomson Reuters GFMS in its annual “World Silver Survey” makes an attempt to calculate the magnitude of these unreported silver holdings and labels them as ‘Custodian Vaults” silver holdings.
 
As GFMS states in its World Silver Survey: 
 
“Custodian vault stock data excludes ETP Holdings, but it is important to note that most custodians of ETP silver stocks also store silver in vaults that are not allocated to ETPs”. 
 
For 2016, GFMS calculates that globally, ‘Custodian Vaults‘ account for a massive 1571.2 million troy ounces of silver (50,440 tonnes). Note, this ‘Custodian vaults’ category of GFMS reporting is distinct from the silver held by ETFs/ETCs (aka ETPs), futures exchanges, government stockpiles and industry inventories.
 
Above-ground Identifiable Silver Stocks –  Source: GFMS World Silver Survey 2016. Click to Enlarge
 
GFMS classifies all ETP, Exchange and Industry holdings as “Reported“, and all Custodian Vaults and Government holdings as “Unreported“. Therefore, it is useful to regroup the 2016 figures from the above table into a Reported category and an Unreported category. A regrouped table of the 2016 data is as follows, and illustrates that ‘Custodian Vault’ holdings of silver (none of which are reported) account for a whopping 61% of all above ground silver:
 

 

Identifiable Above-ground silver stockpiles, 2016  – grouped by Reported and Unreported categories

 

 
Identifiable above-ground Silver grouped into 5 categories, 2007 – 2016. Largest % is ‘Custodian Vaults’. Source: GFMS World Silver Survey 2017
 
GFMS breaks down these ‘Custodian Vault‘ stocks of silver regionally but not be country. And says that Europe’s share of Custodian Vault stocks was 488.7 million ozs (15,201 tonnes) in 2016, accounted for 31% of total Custodian Vault stocks. Asian ‘Custodian Vault’ stocks of silver were just over 50% of the total with the remainder in North America (Canada and US).
 
Silver holdings in Custodian Vaults by Region, 2007 -2016. Source – GFMS World Silver Survey 2017
 
But what do these ‘Custodian Vault’ stocks of silver refer to? GFMS does not provide a real answer, but merely mentions a number of examples, which themselves vary by region. For Asia GFMS says “the bulk of these stocks are located in China, and reflects stocks held in vaults at banks“, and also ”other parts of Asia, such as Singapore, have been increasing in popularity for storage of bars and coins in recent years“, while in India “global bullion banks increasingly seeking this location as a strategic point for silver vaulting in case the need arises.” From a BullionStar perspective, we certainly are aware that there is a lot of silver bullion in vault storage in Singapore.
 
In North America, GFMS attributes the “growth in silver custodian vaulted stocks [that were] not allocated to ETPs” to a “drop in coin sales in North America last year“. In the 2016 edition of the World Silver Survey, GFMS said that the growth in custodian vault holdings was partially due to “the reallocation by some North American investors from their ETP holdings” [into custodian holdings].
 
Turning to Europe, GFMS says that the growth in Custodian vault silver holdings “can be attributed to increased institutional investor interest“. Therefore, according to GFMS, institutional investors in Europe are buying silver and holding real physical silver in Custodian vaults. I asked GFMS could they indicate which European countries are the largest components of their European Custodian vaults category, but they replied that for confidentiality reasons, they could not reveal this information.
 
With 488.7 million ozs (15,201 tonnes) of silver held in Europe in ‘Custodian vaults’ that is not reported anywhere, at least some of this silver must be held in London, which is one of the world’s largest financial centers and the world’s highest trading volume silver market.
 
So how much of this 15,201 tonnes of ‘Custodian Vaults’ silver that is said to be in Europe is actually in London vaults? Apart from London, there would presumably also be significant physical silver holdings vaulted in Switzerland and to a lessor extent in countries such as Germany, the Netherlands and maybe Austria etc. So whats’s a suitable percentage for London? Given London’s extensive vaulting network and prominence as a hedge fund and institutional investment centre, a 40-50% share of the European ‘custodian vault’ silver holdings would not be unrealistic, with the other big percentage probably vaulted in Switzerland. This would therefore put previously ‘Unreported’ silver holdings in the London vaults at between 6080 tonnes and 7600 tonnes (or an additional 182,000 to 230,000 Good Delivery Silver bars).
 
Adding this range of 6080 – 7600 tonnes to the 12,040 tonne figure that the 11 ETFs above hold, gives a total figure of 18,120 – 19,640 tonnes of silver stored in the LBMA vaults in London (545,000 – 585,000 Good Delivery silver bars).
 

Vampires Scurry

 
When the LBMA finally manages to publish its first report on the silver and gold stored in the LBMA vaults in London in the coming days, we will have a clearer picture of how much physical silver is actually in these mysterious and opaque vaults.
 
A lower bound based on ETF holdings about 12100 tonnes of silver. A higher bound that also reflects ‘Custodian Vault’ holdings could be in the region of 18120 – 19640 tonnes of silver. There would probably also be some LBMA bullion bank float, which may or may not be included in ‘Custodian Vault’ figures, that could push the silver total to over 20,000 tonnes or more.
The LBMA regularly claims that it wants to bring transparency to the London precious metals market. This has been a very hollow mantra for a long time now. However, while some of the LBMA members may want this transparency, others, most likely some of the powerful bullion banks or their clients, certainly don’t want transparency. 
 
Take a case in point. At the Asia Pacific Precious Metals Conference (APPMC) in Singapore in early June, the LBMA CEO in a speech to the conference talked about the difficulty of even getting a press release out about the upcoming publication of gold and silver vault holdings data. She said (fast forward to 8:37 in the below video):
 
“It was actually a huge achievement just to get the press release out.”
 
For what is supposed to be a mature and efficient financial marketplace, this is a truly bizarre occurrence, and it must be pretty obvious that some of the vested interests in the London gold and silver markets needed to be dragged kicking and screaming over the finish line as regards being in any way open about how much gold and silver is actually in these LBMA London vaults.
But now, according to the LBMA CEO in the same part of her speech, even so-called “credible investors” (as opposed to uncredible investors?) also “find it a little odd that as a marketplace, there’s no data“, which may explain the vampires within the LBMA being dragged into the daylight.
 
Hopefully with the above analysis and the upcoming aggregated LBMA silver vaulting numbers, these “credible investors” (and the hundreds of millions of less worthy silver investors around the world) will now be less in the dark about the amount of silver in the London LBMA vaulting network, and will now have better information with which to make investment decisions when buying and selling silver.
 
 
This article is a summary of a full and comprehensive original article about the amount of Silver in the LBMA London silver vaults. The full article, with the logic and calcualtions of the ETF analysis is on the BullionStar website under the title "How many Silver Bars are in the LBMA Vaults in London?".

 

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Bopper09's picture

What always rings true:  If you don't hold it, you don't own it.

OldPost's picture

Hong Kong... comin on board...........

Mr. Guts's picture

Buy Litecoin AND Silver 

Silver Savior's picture

Yep got both and I feel safe.

exartizo's picture

FUCK SILVER.

BUY LITECOIN.

Silver Savior's picture

You are going to think fuck silver when the price runs away but there is no more to be had.

tailgunner's picture

We know that leased silver is shown as owed by both parties, or more.  It will bring a huge problem if many want delivery.  If a ounce of Gold is owned by 300+ parties or more in the LMBA  imagine the losses 299 of the holders per ounce will bear. when delivery is demanded.  Both in silver and gold.

PlayMoney's picture

Audit goes something like this...."Yo Johnny, $100 billion in gold down there right?" "Uh, Sure mate....$100 Billion" Lunch.

SoilMyselfRotten's picture

Exactly, the numbers will be as trustworthy as the institution is currently. And why in the world are they now interested in transparency? Somethin stinks

Bam_Man's picture

Holy Cow - Who else saw Silver flash crash to $14.75 at 7:30pm EDT?

"Efficient Markets".

ROFLMAO.

Silver Savior's picture

*yawn* It's just paper silver. Glad I only do physical.

Sweet Cheeks's picture

Bam_Man

Dang. 7:30PM was when I got distracted baking oatmeal cookies, from scratch, I might add.

cosmyccowboy's picture

thats chicken feed compare to ETH 2 weeks ago going from 300 plus to a dime and back to 250 plus in a 15 minute period!!!

JailBanksters's picture

if HSBC loans 10 Millions ounces to JP Morgan

and if JP Morgan loans 10 Million ounces to Brinks

and if Brinks loans 10 Million ounces to Malca Amit

and if Malca Amit loans 10 Million ounces to ICBC Standard Bank

and if ICBC Standard Bank loans 10 Million ounces to Loomis

and if Loomis loans 10 Million ounces to G4S

and if G4S loans 10 Million ounces to HSBC

 

How much Silver is in the Vault ?

A: Zero

B: 10 Million Ounces

C: 70 Million Ounces

 

 

geekz_rule's picture

A: Zero

#BankstersAreTheRealTerrorists 

#HostLife  - because we have been turned into "hosts" (food source) (rent payers) for the 1% inbred parasites (leeches) (rent collectors)

P < P + I

OverTheHedge's picture

I don't know how much in reality, but for GDP purposes it must be at least 140 million, possibly as high as 1.4 billion, after adjustments

Dragon HAwk's picture

Why do they need a Vault?                    if it is so Worthless?

100$ Buys this car.. I need Groceries   my Kids can't eat paper.

JailBanksters's picture

Why is Gold and Silver stored in Vaults guarded by Men with Guns

Money is not even Guarded, and Banks leave the door open during the Day.

Money is absolutely Worthless to a Bank, Banks will always tell you the Inverse like

don't buy Gold because  it's worthless.

 

Skeet Hazzard's picture

Koos please explain how massive gold and silver dumps happen day in and day out at the same exact times and no one can finger the culprit???

Conax's picture

I hate to break the news here but they get away with it anonymously because the 'regulators' hands are tied by our government. Yes, the Orange One is down for market controls even more outrageous than the Usurper was allowed.  But he is on our side. In some regards. Just not this.

See his cabinet... 'nuff said.

Silver Savior's picture

Probably more silver in my rings that I am wearing than in their vaults. They do the paper shuffle.

Silver Savior's picture

A few things I don't understand. Why do good delivery bars vary in weight? It can mean the difference of hundreds of ounces. That's sketchy. And the other thing is why more security for gold than silver. I actually think silver is the more valuable one. Time will tell. 

And I trust no audit from anyone but myself but it will be neat to see how much silver they are lacking compared to paper silver. That will be a hoot.

cosmyccowboy's picture

smelting is still done in a primitive way so when they pour molten silver into molds they dont always get the exact same amount in each mold!

buyingsterling's picture

Can anyone provide insight into the 7:30 PM EST flash crash in silver? $16 to $14.27 in minutes

missionshk's picture

the bankers want to clear out all of the stop losses before it goes UP, because this ensures there are few that will be selling as it goes UP, BECAUSE THEY WILL HAVE REMOVED AND FORCED SOLD EVERYTHING AT A LOWER PRICE

Bam_Man's picture

"Efficient Markets."

ROFLMAO.

Keep it up (((fellas))). We get to keep stacking for less.

Clock Crasher's picture

Publish a large quantity of silver supply. 

Send spot price crashing. 

You heard it hear first. 

And sequential reports will grow in supply sending spot into the single digits. 

Then the miners go out of business. 

Then after deepstate buys up all supply they can reprice anywhere they want. 

Three figures sounds about right. 

bluskyes's picture

Why should I believe these numbers more than any others they publish

Madcow's picture

Have any of those "banks" NOT been found guilty of rigging the PM markets for the benefit if criminals (AKA "insiders") ?

 

indygo55's picture

What is a gold mine? A hole in the ground with a liar at the bottom of it. Same shit here I recon. 

No, really good article. Best one I've read in a while. I didn't know the details about the bars and pallets and so on.

Well done. 

 

 

NoWayJose's picture

Just check them at random - or on the same day / so they do not move the silver between vaults!

HANGEMHIGHER's picture

So a bunch of liars who have been lying for years, are going to tell us how much silver they have? Is Bernie Madoff doing the audit?

Sudden Debt's picture

Why liars?

They just admitted that NO WAY they have as much silver as they are selling contracts per day.

They only have snowflake of silver to backup the papermarket.

It's pretty fragile.

 

Sudden Debt's picture

There's still plenty of silver because it hasn't gone mainstream yet. And as long as there are no shortages.

But...

19 million kilo's, 627 million ounces, that's aboutt 1/10th of an ounce of silver for every person on earth.

a penny... per person.

Now that means if you buy a monsterbox, you're buying the ration of 5000 people. 10 monsterboxes is a small city, 200 monster boxes is a big city, 2000 monsterboxes is new york city. And that's worth aboutt 8 million dollar.

So put that in perspective and that's not a lot ;)

 

Know shit's picture

ETF's, tonnes, pallets, bars....
I don't give a shit.

The only thing that counts to me is the silver I posses.
And when all the bullshit becomes visible as just that, I'm pretty sure my silver that is 'only' counted by the ounce will be worth a lot more than it is right now.

Take care

ali-ali-al-qomfri's picture

Canoe ride high in water, when filled with ETF.

 

 

Conax's picture

We have comex inventory reporting now, and look what that's worth.

"The LBMA will report (lie about) physical holdings data on an aggregated basis for each of gold and silver, i.e. one quantity number will be reported each month for vaulted gold, and one quantity number will be reported each month for vaulted silver. The LBMA data will be on a 3-month lagged basis."

Three months is plenty of time to dump the phyzz in raids, cook the books, buy back (at the new lower price) illegally sold bars and get their story straight. This worthless 'report' is just a new market maker's tool.

Erek's picture

Think this will change anything?

Urban Roman's picture

How many of them are just molybdenum bars covered with silver leaf?