Interesting.

Bill,

I promised you some comments on silver trading on the LBMA OTC market.

The average daily trading is currently running at about 95 million ozs. That is "net ounces transferred" on a daily basis as per the LBMA website. It is NOT gross trade.

http://www.lbma.org.uk/stats/clearing

This is a phenomenal amount of trade. It is 5 times the average daily net gold trade on the LBMA of approximately 18 Mozs! What could possibly be backing this trading? There is very little above ground silver. The central banks have none. The largest identifiable stocks are on the COMEX and SLV which together total 400 Mozs. Experts estimate that there are only about 1 Bozs of silver above ground if ALL silver is taken into account. So how could the LBMA trade 10% of ALL silver above ground in the world on a daily basis? The global supply of silver from mining is around 2 Mozs per day. The LBMA OTC trade is 45 times the daily production. If we look at the forwards that are reported by the BIS in their Q2 2009 report they totaled 7.5 Bozs and is on a rapidly increasing trend. At the same time last year the USGS reported all economically mineable reserves were 8.6 Bozs. So the forward sales of silver represent 87% of the remaining mineable reserves on planet earth! Furthermore we must ask ourselves who could be selling forward 87% of the world’s silver reserves? The ONLY legitimate candidates for such forward sales are the mining companies….but if we look at the major silver producers they are not hedged. So who could be selling such vast amounts of silver forwards? It has to be entities that don’t own it above ground nor own it below ground! It therefore has to be "paper silver". This means that the price of silver is suppressed by this monumental phony "supply" of silver. This means that the shorts on the Comex that are supposedly "hedges" of "physical" silver in London are nothing more than paper hedging paper positions.

I think the wholesale silver market is in dire straits. This is why the Comex market is attacked with fury any time there is a pick up in real physical bullion offtake to try to frighten the heck out of would be investors so they will change their ideas.

In my opinion these numbers can not be reconciled with any reasonable trade that could 100% backed by real bullion. It is a fractional reserve operation that is using recklessly low reserves.

Of course, I am sure Jeffrey Christian would assert that everybody already knew this..right?
Cheers
Adrian