What does HSBC know about silver?


Silver Daily, 2010-1013 – (Bloomberg)

Listed metals producer KGHM signed an estimated PLN 1.67 billion deal on 2013 sales of silver to HSBC, KGHM said in a market filing yesterday.

The deal puts the total value of deals between KGHM and HSBC in the last 12 months to PLN 3.65 billion or $876 million, the filing read.

The Management Board of KGHM announced that on Jan. 21, 2013 a contract was entered into between KGHM and HSBC Bank USA N.A., London Branch for silver sales in 2013. 

The estimated value of the contract is PLN 1,672,260,469.66. As a result of entering into this contract, the total estimated value of contracts entered into between KGHM and HSBC Bank USA N.A., London Branch over the last 12 months exceeded 10% of the equity of the Company and amounts to PLN 3,654,120,061.59.

The highest-value contract signed during this period is the above-mentioned contract. The criteria used for describing the contract as significant is that the total estimated value of the contracts exceeds 10% of the equity of KGHM.

KGHM is one of the largest companies in Poland and one of the largest mining and metallurgy companies in the world. 

The main customers of Polish silver in recent years have been the United Kingdom, Germany and Belgium.  HSBC appears to be one of their main customers now.

Respected and erudite, James Steel, the chief commodity analyst at HSBC Securities (USA) Inc. continues to be bullish on silver and recently said how “silver tends to track gold, except it over performs in a bull market”  and how he was “moderately bullish on silver” in 2013.


XAG/GBP Daily, 2010-2013 – (Bloomberg)


XAG/EUR Daily, 2010-2013 – (Bloomberg)

HSBC did not comment on the deal and it only came to light as KGHM is a listed company and had to report the deal, which then was picked up in Polish media. 

The massive deal could simply be HSBC securing supply for the NYSE listed ETFs’ Physical Silver as they are the custodian.

Or it could be that senior people in HSBC are concerned about securing supply as they expect robust investment demand to continue and possibly increase resulting in higher prices.

About the Author
Mark O'Byrne

Mark O'Byrne is executive director of Ireland-based GoldCore.

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