Part 1 - The World's Cumulative Silver and Gold Production. Documenting the total amount of silver and gold produced since recorded history.
Part 2 - The Silver Deficit. Documenting the silver production/consumption deficit since 1939.
Part 3 - The Real Silver Deficit. Answering the questions of "How much silver has been consumed by industry?" and "In what potentially marketable accessible forms does it remain?"
Part 4 - The Illogical Performance of the Gold to Silver ratio Since 1848. Looking at silver and gold's production growth since 1848, and contrasting both this measurement and that of their shrinking ratio of comparative rarity to the ever-widening market price ratio between the two.
Part 5 - Why the Depressed Prices? A brief look at the amount of silver stockpiles held in the early 1900's, as well as some interesting quotes dating back several decades that made the bullish case for silver, unwittingly or not.
Part 6 - What Happened in 1980? Did production increase? Did extraordinary amounts of scrap silver come to market? -- What to expect in any future stratospheric price rise.
Part 7 - The Future of Silver. An overview of silver's fundamentals, focusing in on industrial usage and it's growing number of applications. Also included will be my own short and long-term outlook, together with price predictions for 2006 and beyond.
I'm a relatively new face in the gold and silver bug community, and while attempting to conduct research of my own I found it frustrating that there did not seem to be any sort of comprehensive data source dealing with the subjects of silver and gold production and consumption. In an effort to change this, I've spent several hundred hours this past month perusing through thousands of pages of documents (namely, the Minerals Yearbooks (1933-2004)). It is my hope that this series of articles will serve as reliable reference material for all future writers, researchers, believers and skeptics, saving them all much time and effort better spent breaking new ground in the ever thickening plot behind…
"Total silver production from pre-history till 2001 is estimated by the U.S. Geological Survey (USGS) to have been about 1.26 million metric tons (Mt), one half of which was mined in the last 62 year period." (Page 8)
1.26 Mt x 32,150.75 ounces/ton = 40.51 billion ounces + 2.46 billion
(production from 2001-2005) = 42.97 billion ounces
Cumulative Silver Production = 42.97 billion ounces
Source 2 (multiple)
In the years 1939-1991, total world production numbers are not exact in nature due to a lack of data coming from the communist world:
Russia contributed the vast majority of the above group's silver production, mining an estimated 80% of their cumulative total (25M ounces).
All these numbers are added to the above total, I just wanted to make this issue more clear. In truth, I wouldn't be surprised if the above world cumulative total should actually be a little less due to a possible over estimation of communist Russia's mining productivity, as is evidenced by their declining production numbers since the fall of the Berlin Wall in 1991.
Cumulative Silver Production = 42.62 billion ounces
Source 3 (multiple)
From: "Silver Products and Production". Encyclopedia Britannica, 1974 Ed.
"Total world production up to 1970 was just under 30 billion accumulated ounces." (Let's use 29.5B)
If we add to this the 15.25B ounces that were produced since then (1970-2004) based upon the data from Source 2 then…
Cumulative Silver Production = 44.75 billion ounces
Source 4 (multiple)
Cumulative Silver Production = 48.87 billion ounces
Marion Butler estimated in 1999 (Link) that a total of 40.4 Billion ounces of silver had been produced since 3000BC. If you add to this the amount of silver produced between 1999 and 2004 (3.05B) you get…
Cumulative Silver Production = 43.50 billion ounces
Pg. 88 Minerals Yearbook 1942 "Normally, 5 to 10 percent of world gold output is consumed by industry; the remaining 90 to 95 percent is used for monetary purposes."
http://minerals.usgs.gov/minerals/pubs/commodity/gold/ (Look under: Mineral Commodity Summary)
"Of the estimated 150,000 tons of all gold ever mined, about 15% is thought to have been lost, used in dissipative industrial uses, or otherwise was unrecoverable or unaccounted for."
Therefore, the average amount of gold consumed by industry or lost = 11.25% based upon the above sources.Source 1 provides it's own percentage of attrition (i.e. lost gold), so this value of 11.24% will only be used to evaluate Sources 2 and 3.
Source 1 (multiple):
From Above Chart (Link):
"113,571 tonnes historical production less 10,854 total attrition =
107,717 tonnes." (Year-end 1996)
107,717 tonnes x 32,150.75 ounces/tonne = 3.4632 billion ounces
3.4632 billion ounces + (651.7 million ounces x 90.846%%*) = 4.06 billion ounces
*100% - 9.154% attrition (calculated from the text within the above pie chart).
Cumulative Gold Production = 4.06 billion ounces
"The best estimates available suggest that the total volume of gold mined over history is approximately 153,000 tonnes, of which around 63% has been mined since 1950. The upward trend in annual production is now leveling off, due not least to a considerable slowdown in exploration spending in the late 1990s. Independent analysts are of the belief that mine output will remain flat for the next few years and may even drop slightly." (Year-end 2004)
153,000 tonnes x 32,150.75 ounces/ton x .8875* = 4.37 billion ounces
*100% - 11.25% attrition.
Cumulative Gold Production = 4.37 billion ounces
"Of the estimated 150,000 tons of all gold ever mined, about 15% is thought to have been lost, used in dissapative industrial uses, or otherwise was unrecoverable or unaccounted for. Of the remaining 128,000 tons, central banks hold an estimated 32,000 tons as official stocks, and about 96,000 tons is held privately in coin, bullion, or jewelry." (Year-end 2004)
150,000 x 32,150.75 ounces/ton x .8875 = 4.28 billion ounces
Cumulative Gold Production = 4.28 billion ounces
Source 4 (multiple):
"World production at this time climbed to 280 tonnes in 1852 and thence to almost 300 tonnes as Australia. Production was lifted onto an even higher place in 1886 with the discovery of the huge gold reefs… in South Africa."
Since an estimated 90% of all the gold ever mined was mined after 1848 (Gold History):
4.36485 billion ounces/.90 = 4.8498 billion ounces x .8875 = 4.30 billion ounces
Cumulative Gold Production = 4.30 billion ounces
We'll deal more extensively with the silver to gold ratio in Part 4 of this series, but just for fun let's find out what the ratio is in terms of the total amount of silver and gold ever mined in the history of the world:
44.55 billion ounces of silver/ 4.25 billion ounces of gold = a 10.5 to 1 ratio
Hmmm…This says nothing of the silver deficit and yet the ratio already reveals that at today's prices ($9/ounce vs. $540/ounce) silver trades at an 82.5% discount to gold, or conversely, it could be said that gold is overvalued by about 570% in terms of silver. Of the two ways of looking at the comparative price, I'll most certainly choose the former as I believe both silver and gold will be going up wildly in price in the coming years. Most would agree that neither gold nor silver is undervalued in terms of the dollar, so the only way to look at this situation is to say that silver is undervalued in terms of the dollar and gold. This means that I expect silver to far outperform any gains seen in the price of gold, even if gold doubles or triples in price within these next 2 years. The ratio will shrink, and silver will rise much faster, drawn up, as if by a vacuum in space, a vacuum created by the long-term market manipulation, short selling, and government dishoarding.
Don't believe me? Well then, you'll just have to wait until next time when we'll be stumbling into the "Silver Zone", and taking a much closer look at the much-lauded silver deficit.
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14 January 2006