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Unveiling the Silver in the LBMA London vaults

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.


- Click to enlarge

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.


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.

Tonnef of ETF Silver

ETF Silver Holdings – Tonnes, for Silver stored in London LBMA Vaults - Click to enlarge

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?

Total ETF Silver Bars

Number of ETF held Good Delivery Silver Bars stored in London LBMA vaults - Click to enlarge

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.

Silver Survey 2016

Above-ground Identifiable Silver Stocks – Source: GFMS World Silver Survey 2016. Click to Enlarge - 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:

Global Indentifiable Above Ground Silver Bullion Stocks

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

Identifiable above-ground Silver grouped into 5 categories, 2007 – 2016. Largest % is ‘Custodian Vaults’.

Identifiable Above Ground Silver Inventories, 2007 - 2017

Identifiable Above Ground Silver Inventories

- Click to enlarge

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.

Custodian Vault Stocks, 2007 - 2017

Custodian Vault Stocks, 2007 - 2017

- Click to enlarge

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.
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Ronan Manly
Ronan Manly is an investment professional and research analyst with an interest in the monetary gold market. His career has taken him from Dublin to London, New York, and Frankfurt, in roles spanning portfolio management, stockbroking, and technology, working for companies including Dimensional Fund Advisors and Morgan Stanley. In his time, Ronan has collected various economic and finance degrees, most recently a Master's in Finance from London Business School.
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