BIS data of “other precious metals” compared to “LBMA vault holdings of silver” is not a perfect measure of excessive nature of the fraud of OTC “over the counter” futures contracts. But the large financial institutions are very stingy with their data, and this is the best data we have available to determine the size of the fraud they are perpetrating in the precious metals markets. In fact, this is relatively new data as well, only a few years old.
We will start with the BIS data at this link:
Click under: D5.2Commodity contracts, credit default swaps
If you click on the actual number $65 billion, it goes to a table showing that in 2009, the numbers were as high as $200 billion notional value of “other precious metals” (mostly silver).
This category is “silver, platinum, palladium” notional derivatives, or, probably 90 to 95% silver. The fact that they bundle this data on silver, with “other precious metals” goes to show they are making a serious attempt to conceal this data.
Actual Value of Derivatives is only $4 billion. So, $4 billion worth of contracts, controls $65 billion of metal, showing leverage of 65/4 = 16.25 to 1.
“Current LMBA Vault Holding Data” is only $17 billion worth of silver.
The figure for LBMA vault holdings was only released starting July, 2016, whereas the BIS numbers were first publicized by me in 2009.
The $17 billion of silver that the LBMA banks have in the vaults, in many cases, cannot be used to back the derivatives of $65 billion, because a portion of their vault holdings are allocated to other owners, such as ETFs, bullion funds, or client holdings.
So, something less than $17 billion, backs up $65 billion, or up to $200 billion of (90-95% of which is) paper silver!
And average daily trading volume at the LBMA is $5 billion worth of silver!
So, some people are trying to buy $65 billion worth of silver that does not exist, or some other group of people are trying to sell $65 billion worth of silver that does not exist. (Even up to $200 billion!)
The vast majority of futures contracts are for less than 1 year.
World Annual Mine output of silver is about 1 billion ounces, at the current silver price of $15.07 is worth about $15 billion.
There is no possible way to satisfy $65-200 billion of contracts. The contracts are excessive, and their massive size indicates fraud!
We have been able to do a similar comparison of the open interest compared to the warehouse stocks at COMEX, run by the cmegroup.
As of July 5th, the open interest in silver futures is 222,557 contracts for 5000 oz. = 1,112,785,000 oz. x $15.07 = $16,769,669,950 = $16.8 billion dollars worth of silver.
The actual silver in warehouses is listed in an Excel Spreadsheet you can download here:
|Registered: 92,874,986.699 x $15.07/oz. = $1,399,626,049 = $1.4 billion dollars of silver.|
Only the Registered silver is available to be delivered against futures contracts. The Eligible category may be held by people who just want to sit on 1000 oz. bars of silver in a Brink’s warehouse for 10 years or more.
Again, we see the notional value of silver contracts far exceeds metal, at a ratio of 16.8/1.4 = 12 to 1.
To me, this indicates they have sold, on paper, 12 times as much silver as they have.
Or, another way to say it, 11/12 contracts for silver are like “naked short”, meaning, they did not first make sure they had silver or borrowed silver to deliver into a futures contract, before they sold the futures contract.
That, to me, indicates fraud. But that is standard business practice in America these days, and is not illegal as far as I’m aware.
Some have written that these oversized paper contracts act to suppress the price, and others write as if these large paper markets excessively increase the price of silver. So, which is it?
Well, imagine that people did not spend $4 billion on paper contracts of silver, but attempted to buy real silver.
Or, imagine that people did not try to buy $200 billion worth of paper silver, for far less, but rather, tried to buy $200 billion of actual silver? (This is far less likely, but also possible, given the vast amount of paper wealth that exists.)
Thus, I think the paper is a diversion, and that prices would be far higher if paper silver was not offered to people as an alternative to real silver.
Bernie Madoff ran a $65 billion fraud, whereby he never bought stocks with his “fund” of money. How is this substantially any different when there is no possible way the big banks ever bought nearly enough silver to back up all the silver futures contracts they sell?
If you knew, in advance, that Bernie Madoff was a fraud, would you still hold money in his fund? Of course not.
Now that you know the BIS, LMBA, and COMEX numbers, why would you, or anyone who is aware of this publicly available information, willingly participate in trading with those banks and markets?
Another writer, Ronan Manley, explains similar things in the gold market.
Key Excerpt: “On a monthly basis, the London Gold Market looks to be trading about 130,000 tonnes of gold (assuming 22 trading days per month). On an annualised basis, the 189 million ounces (5880 tonnes) of gold traded each day in London (based on the August clearing figures and a 10 to 1 trading multiple) and assuming 250 trading days in a year, would imply that 47.25 billion ounces of gold are traded each year in the London OTC gold market, or 1.47 million tonnes of gold.”
“However, there have only ever been about 190,000 tonnes of gold mined throughout history, with nearly half of that said to be in the form of gold jewellery, and only 38% held in central bank and private hoards. Therefore on a monthly basis, the London gold market looks to be trading about 68% of all the gold ever mined in the history of the world, and on an annual basis, the London gold market looks to be ‘trading’ more than 11 times the amount of gold ever in existence, even though nearly all of this above ground gold is never in fact traded at any given time.”