In Ted Butler's Archive


For the past three years, I have commented on the turnover or movement in and out of the COMEX-approved silver warehouses. Prior to April 2011, I had noticed no particular pattern in these inventories. Since that time, there has been a noticeable pattern of large daily and weekly deposits and withdrawals of silver from COMEX warehouses. One of the most notable features is that it has been confined to silver and not gold or copper. On average, there has been a 3 million ounce weekly turnover in COMEX silver inventories over the past three years, or 150 million ounces on an annual basis. This week, the silver warehouse turnover hit over 8 million ounces, or 400 million ounces annualized one of the largest in memory.

This silver warehouse turnover is no simple bookkeeping entry. It takes metal out of the warehouses and puts in on trucks or takes it off trucks and puts it into the warehouse. It involves trucks, insurance, warehouses, auditors and assorted middlemen that track movements to the ounce. A typical truckload runs 600,000 ounces of silver or $12 million, an amount that would be closely accounted for every step of the way. And it certainly costs money to move this amount of metal every day. I can’t say exactly why the turnover is so high. My best guess is that some type of large physical demand requires the movement. Isn’t that the same as tightness and a pending shortage? If I am close to right as to why this COMEX silver warehouse turnover exists, there may be a pending physical shortage and a dramatic new price.

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