HSBC buys silver bars worth $876 million from Polish producer KGHM in the past 12 months
Bullion bank HSBC has quietly snapped up silver bars costing $876 million over the past 12 months, filings by the seller KGHM have revealed in the Polish press as reported by GoldCore today (click here). These bullion bars are verified by certification issued by the London Market Association and Dubai Multi Commodities Centre.
Why the British bank bought so much silver is a mystery as the bank will not comment on such deals. But it has just placed another huge order for 2013 valued at around $250 million.
This makes HSBC the largest customer of KGHM. The disclosure was forced because the purchase exceeded 10 per cent of the equity value of the Polish company. KGHM is among the largest bullion producers in the world and one of Poland’s largest companies.
HSBC may require the silver to supply the NYSE listed ETFS Physical Silver of which it is custodian. Demand for silver exchange traded products has surged in recent months. Or this could be a proprietary investment in bullion by the bank for its own trading desk. There is no talk of giving out silver bars as bank bonuses this year.
However, this clearly marks an increase in investment demand for silver and that can only come in competition with demand from industrial processes for the shiniest of metals. The supply of silver is relatively fixed as it is mainly a byproduct of mining copper and zinc and seldom produced independently.
Stocks running out?
Stocks of sliver are believed to be very low around the world because it has been so cheap for years that production has stayed below consumption. At some stage a supply scare is going to push the price of silver much higher. HSBC may be preparing for just that and ironically be one of the causes by its huge bullion buying.
There are rumors that the latest Apple iMac production line is running late because of inadequate supplies of silver. Computers and mobile phones use a lot of silver in their circuit boards. That sounds like nonsense but the truth could be that a silver shortage is in the pipeline, and where are those iMacs?
Could that be why HSBC is stocking up with silver bars now?