Chapter 6 of 16

Silver inventories, warrants and accessible float

Separate the physical stock count, location, ownership, warrant status and willingness to sell before arguing that a market is tight.

3 min read · Original educational chapter

In this chapter

A stock count needs a perimeter
Distinguish reclassification from a physical movement
Available is an economic concept
Read delivery, inventory and open interest as different ledgers
Construct a stock-flow reconciliation
Worked example
Common mistakes
Check your understanding
Desk assignment

A stock count needs a perimeter #

Record whether a series is a vault holding, exchange-reported warehouse quantity, fund holding or an estimate of above-ground stocks. Location, quality, reporting date and scope differ. The same physical silver can appear inside an ownership-based product series and a location-based vault series.

LBMA’s vault data and an exchange inventory series are useful observations, not a complete census of global metal available for immediate sale. Adding overlapping categories creates a more precise-looking error rather than a better scarcity measure.

Distinguish reclassification from a physical movement #

A warrant-status change can move reported metal between eligible and registered categories without a shipment. A physical departure can occur for several reasons, including a transfer to another location, another owner or another use. None of those motives is identified by a category change alone.

CME’s reporting and delivery documentation explains inventory and warrant concepts. Apply the actual current contract rules for a real delivery. Do not equate a bar meeting specification with a commitment by its owner to sell it now.

Available is an economic concept #

Metal can be physically present but constrained by ownership, custody agreements, financing, operational access or the owner’s reservation price. Accessible float is therefore an estimate conditional on terms, not just total stocks minus a convenient category.

A careful note gives a range and states exclusions. Do not assume all eligible metal can be mobilised at the screen price, or that none of it ever can. Both absolutes erase the economic and operational question.

Read delivery, inventory and open interest as different ledgers #

Delivery notices can indicate transfer under the exchange’s process; open interest is the number of outstanding contracts in its own scope. A single stock category is not necessarily the metal demanded by all open contracts at once. Many positions close or roll, while actual delivery behaviour needs its own study.

An open-interest/registered-stock ratio can be a descriptive indicator under a stated conversion, but it is not by itself a mechanical default probability. Check expiry concentration, position offsets, owners’ choices and the contract’s delivery process before making a stronger claim.

Construct a stock-flow reconciliation #

Track opening stock, reported receipts, reported withdrawals, adjustments and closing stock under a consistent source. Track warrant changes separately unless the report explicitly combines them. Revisions and assay adjustments should not be relabelled as demand.

Then compare other locations and product holdings without assuming an immediate offset. A shipment can have a transport lag and a financing cost. Your research should explain what the observations establish and what remains an inference about tightness or incentives.

Hypothetical worked example

A fictional reclassification

A vault perimeter holds 40 million registered and 60 million eligible ounces. Ten million ounces are reclassified from registered to eligible: the new categories are 30 and 70, but total stock stays 100. The observation does not show a 10-million-ounce physical outflow.

Suppose a product owns 25 million ounces already inside that 100-million-ounce perimeter. Adding the product to the vault total would report 125 million ounces and double count those 25 million. The same warning applies before constructing a free-float estimate by subtraction.

Common mistakes

Treating every registered-stock decline as a shipment.
Adding ETF ounces to a vault total that already contains them.
Interpreting an open-interest ratio as an automatic delivery crisis.

Check your understanding

Registered stock falls 10 while eligible rises 10 and total is unchanged. What is evidenced?

Make this chapter useful

Can you defend the reasoning?

Before moving on, answer the self-check in your own words and write why each alternative fails. Use the worked example to test that explanation. Then apply it in the module research task; keep the assumptions and the evidence that could change your answer.

Desk assignment

What to submit

Prepare a five-column inventory map: perimeter, legal/economic claim, status, observation date and overlap. Reconcile category and physical changes separately.

Use the research ledger for dated evidence, or the module workbooks for calculations. Separate observations, assumptions and interpretation.

Sources and further reading

Further-reading references from the curriculum source list. Contract sizes, expiry calendars, settlement references, margin parameters and tax treatment can change; verify the current operative documents for the actual product. Worked figures are illustrative, not current quotes.

Progress is stored only on this browser.

Back to Silver: physical flows and relative value · Learning library · Calculators

General financial education. No securities recommendation, assured outcome or personal advice. Read the risk disclosures.