London market running out of silver, 'silver' airlifted from the US and China

Last week inventories hit bottom and at one point surpassed $54.47 per ounce

Last week, the London spot silver market, which briefly ran out of silver stocks, was replenished after large inflows of silver from the United States and China, easing the shortage in London, the world's largest over-the-counter precious metals trading hub.

According to Reuters on the 20th (local time), a week earlier the London market had run out of silver stocks, causing silver prices to surge to levels well above US COMEX futures prices. As a result, silver was even transported by air — a shipping method usually reserved for the much more expensive metal, gold.

Independent metals trader Tai Wong said, "For now the main pressure has been relieved." He estimated that about 15,000,000–20,000,000 troy ounces (311–467 tons) of silver arrived in London from the US last week.

Another source said that since last week at least 1,000 tons of silver from the US and China have entered London vaults.

With gold's price surge and a spike in silver demand in India depleting London market stocks, silver hit a record high of $54.47 per troy ounce last Friday.

According to the London Bullion Market Association, as of the end of September the London vaults held a combined 24,581 tons of allocated and unallocated silver, valued at $36.5 billion.

Amy Gowar, a commodities strategist at Morgan Stanley, said that most of London's stocks are reserved for silver-backed exchange-traded funds (ETFs).

Consultancy Metals Focus estimated that as of the end of September 83% of the silver held in London vaults was allocated to ETFs.

On October 3, the amount of silver in US COMEX warehouses, which had reached a record high of 16,543 tons (531,900,000 troy ounces), saw about 697 tons of silver leave COMEX warehouses.

Earlier this year, when the possibility that President Trump might impose tariffs on precious metals including gold and silver was raised, US dealers rushed to import gold and silver, causing a surge in COMEX inventories.

A precious metals dealer operating primarily in China said that as of last week about 100–150 tons had left China, the world's second-largest silver producer after Mexico.

He said not all Chinese silver headed to London; a significant portion also flowed to India, which is in a festival period and experiencing strong silver demand.

Metals Focus said, "India's air cargo volumes have risen due to silver demand, pushing insurance premiums to unprecedented levels."

Silver inventories monitored by the Shanghai Futures Exchange fell by 249 tons last week to 920 tons, the lowest since May — the largest weekly outflow in 11 years.

Kim Jeong-a, contributing reporter kja@hankyung.com