"Because of the long-term structural deficit in silver, stretching back to World War II, we have consumed inventories for more than 60 years."
-Ted Butler, "The Coming Silver Bubble"
-Ted Butler, "The Coming Silver Bubble"
This essay will seek to prove what Mr. Butler and other silver bulls have been confidently asserting for so long, that is, the claim that silver has experienced a supply/demand deficit which stretches back all the way to 1942.
Quote: Did you know that there is more than 5 times as much above ground available gold as there is silver? That gold since 1950 has gone from an inventory of 1 billion ounces to over 5 billion, meanwhile silver has gone from 10 billion ounces to around 1 billion ounces.
The video was posted in December 2010, and at that time I thought it was true.
I wonder if they were just making it up, we counted over 4.5 billion ounces in silver coins (end of 2012) above ground. It was a well-done persuasive video, too bad it was so wrong.
Ted indicates total silver above ground increased by 100 million ounces per year for the years 2006 through 2012. If he's right that would push this forum's Total Silver Above Ground as of the end of 2012 number closer to 25 billion ounces (original forum post was 24 billion ounces end of 2012)
Ted plays down forms other than 1000 ounce bars, hard to say why.
In this teaser he ignores significant above-ground supply to come as hungry people trade their silver spoons and jewelry for food. I have seen Sterling silver rounds at coin shows.
But so much more silver was consumed than was produced through 2006 that world inventories of silver bullion (in the form of 1000 oz bars) have fallen to a bit more than one billion ounces today, despite the ending of the consumption deficit.
But wait a minute – didn’t I just say that total production of silver started to exceed industrial consumption around 2006? How the heck can there be a silver shortage if total production exceeds industrial consumption? Well, for starters, silver total production doesn’t exceed industrial consumption by much; say by 100 million ounces or so annually on a billion ounces of total production.
Total silver fabrication demand (industrial consumption plus jewelry, coin and all other such uses) consume 90% of total supply (mine production plus recycling) of one billion ounces. This leaves around 100 million ounces (in the form of 1000 oz bars) to be absorbed by the world’s investors, or $2 to $2.5 billion annually.
There are most certainly a lot of moving numbers in the calculations and quite a few relatively tweaked assumptions to work off including but certainly not limited to the GSR in the neighborhood of 16. I am unconvinced that we see anything close to that kind of ratio going forward or at least within our lifetimes but I will be happy to be wrong about that. Also one must remember that in addition to the somewhat murky total overall AG recycle numbers there is also the highly significant aspect of alternative methods of production or various alloys that can increase or decrease the industrial demand on silver. Its a bear of a calculation but I believe it worth at least a few minutes of careful consideration per day.
I too have preferred silver to gold mostly because I adore the color of it. Gold has a wonderful allure but silver is just so much more appealing to this stacker. Further I have heard the argument made that "since banks are collecting gold it is therefore the preferred method of maintaining buying power". I think there are a number of positions one can take to this conclusion but lets stick to the topic at hand shall we ?
I try to keep everything within the perspective of history since it is a subject I enjoy doing in my spare time. It is also convenient for the GSR and precious metals discussions on boards such as this and so I present to you the historic Perfect Storm for silver. I would be prepared to argue that if such an instance occurred in the past there is a distinct possibility of it happening again in the future.
Silver production spiked after the "discovery" and mining of Potosi by the Spanish. There was also an interestingly comparative need for it in China at about the same time due a set of issues that were mostly political in nature. The Chinese were suffering from a series of paper fiat issuances which forced those who used the currency into a "spend it or lose it" situation every time the government changed hands. Chinese copper coins were being used as a measure of value but it was worth more as a medium of exchange than its base metal weight or value so there wasn't much incentive in continuing the practice. Further the influx of silver into the European continent in such large amounts was causing a drop in its relative value. It was essentially a perfect convergence for silver further magnified by a lack of demand in the Chinese domestic market for European exports while there was a high demand for Chinese exports in European domestic markets which the Spanish had ample access to.
So at the risk of repeating myself, the Chinese wanted silver as a store of value in addition to needing an underlying metal with a relatively fixed rate of exchange to help alleviate their currency concerns. The Spanish in turn had an abundance of Potosi mined AG with a diminishing value going forward and a correspondingly high European markets demand for silk, porcelain and other Chinese goods. A market was established in Manila and the rest is history.
2 billion ounces from the Manhattan project
1 billion ounces in China that they could have put on 10 year leases 10 years ago (up from a "known" 300 million ounces in 1930
Quote: I believe that the “call” will come on 2 separate fronts for silver. One with the 10 yr. leases expiring and China calling those which will coincide with massive contracts standing for delivery on the COMEX for a double whammy. Will they get all of their silver back? No, but they have stockpiled gold in much more numerous “dollar” figures than their silver could have ever been worth. Enter Russia and the Saudis who for sure will (Russia) and probably will (the Saudis) begin to price oil in currencies other than dollars. This will cut the legs of demand out from under the dollar…simultaneously with a call on silver …at a time where gold reserves have been depleted. Can you say “re set?” Can I prove any of this? No, but I can prove that there were only two large hordes of silver in the past (3 if you include Buffet’s ham sandwich 129 million ounces). We know of 2 billion ounces procured from the scrapping of the “Manhattan Project” and we also know that the Chinese had at least 300 million and probably more like 1 billion silver ounces…which would have gotten us to where we are now if you look at the supply deficits filled for the last 30 years. We know that China had 300 million silver ounces in 1930 and that they have been mining ever since without ever exporting any of it…they surely must have gotten to 1 billion ounces by the turn of the century in another 80-90 years of mining.
Can I prove any of this? No, but I can prove that there were only two large hordes of silver in the past (3 if you include Buffet’s ham sandwich 129 million ounces). We know of 2 billion ounces procured from the scrapping of the “Manhattan Project” and we also know that the Chinese had at least 300 million and probably more like 1 billion silver ounces…which would have gotten us to where we are now if you look at the supply deficits filled for the last 30 years. We know that China had 300 million silver ounces in 1930 and that they have been mining ever since without ever exporting any of it…they surely must have gotten to 1 billion ounces by the turn of the century in another 80-90 years of mining.
Bill Holter says:
April 18, 2014 at 11:12 am
Thank you Nick, the silver was held in Shanghai and was documented there as late as 1949 when Mao assumed power. I believe that MacArthur moved 69 gold tons to Taiwan during or just after the war. My point to the article was “where” could silver be coming from to supply the deficits? Just a theory but like you said, “not impossible”. We just do not know of any single large hordes other than LBMA, SLV and maybe COMEX. I agree with Eric Sprott that there is no way that SLV could have been supplied the REAL tonnage that they claim to have.
Tyberious : https://www.tfmetalsreport.com/comment/255052#comment-255052
Quote: I'm not attacking you but evidence is in favor of both BrotherJohnf and Admiral Sprott! Please read! https://www.bullionbullscanada.com/silver-commentary/26518-the-secret-silver-stockpile-part-i https://www.bullionbullscanada.com/silver-commentary/26519-the-secret-silver-stockpile-part-ii
Nielsen quotes Butler
Quote: Ted Butler’s estimated “global stockpile” (about 1 billion ounces).
but forgets to include the "of comex deliverable bullion bars" that goes with Butler's quote.
I believe the 24 billion ounces number for silver above ground documented in this forum is a more reasonable estimate. The 2.5 billion ounces of silver in coins number documented in this forum is an understatement.
There's a solid bullish case for silver with 24 billion ounces of silver above ground.
Yep, that 24 billion oz would still do under 4 oz per person on this planet.
I would think they are more like talking about the potential supply to the inevitably coming future pricing mechanism there. But of course, when the price skyrockets, at least a part of that 24 billion oz would come in as supply, me suppose.
And it won't change much at the time.
Jan Skoyles' numbers are surprisingly close to what we found:
Irretrievably lost 3000BC-2012AD: 25 Billion ounces or 789000 Tonnes
Skoyles said 632199 Tonnes
Silver above ground end of 2012AD: 24 Billion ounces or 748000 Tonnes
Skoyles said 770275 Tonnes
I wonder what her sources are. Our sources are shown in the forum.
Ted Butler Aug 26 2014
Quote: Today, only a little over one billion oz of metal in accepted bullion industrial form exists with perhaps another billion oz existing in coins and bars.
He's a well-respected precious metals analyst. All I am is a guy (without even a macbook) that tried to corroborate his claims and spent a couple of months with Hagarth counting coins and putting this picture together..with all the steps documented (above)
We counted over 4.5 billion ounces in silver coins (end of 2012) above ground, the more we looked, the more we found. Bars and silverware and silver jewelry likely add up to much more, but are devilishly hard to count.
There is an adequate bullish case for silver, no need to put in bad numbers.