This is the first installment of a planned 7-part series:
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 1942.
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, as well as their shrinking
ratio of comparative rarity, and comparing these to their market price ratio
for that same period.
Part 5 - Why the Depressed Prices? A brief look at the amount of silver
stockpiles held in the early 1900's, and how almost all of it disappeared.
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
with my own short and long-term outlook, including price predictions for 2006
and beyond.
Preface
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...
Those precious two,
Of gold and silver hue,
"You missed them too?"
"Boy, how they flew!"
Cumulative World Silver Production
Source 1
USGS (United States Geological Survey)
http://pubs.usgs.gov/o
f/200 4/1251/2004-1251.pdf
"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)
The
History of Silver (3000BC-1493AD)
Time Period |
Annual Production |
Period Total |
3000BC-600BC |
0.75 million ounces |
Est. 1.8 billion ounces |
601BC-1000AD |
1.5 million ounces |
Est. 2.4 billion ounces |
1001AD-1492AD |
7 million ounces |
Est. 3.4 billion ounces |
Grand Total |
|
7.6 billion ounces |
Bureau
of Mines Minerals Yearbook (1493-1930)
(Billions of Ounces)
Total World Production |
Time Span |
Total Amount |
1493-1930 |
14.97B |
Bureau
of Mines Minerals Yearbook (1931-1993)
The Silver Institute (1995-2004)
(millions of ounces)
Year(s) |
World
Production* |
Year(s) |
World
Production* |
Year(s) |
World
Production* |
1931 |
195.6 |
1956 |
222.4 |
1980 |
341.4 |
1932 |
164.9 |
1952-56 |
220.7 (avg.) |
1981 |
361.6 |
1933 |
169.2 |
1957 |
231.1 |
1982 |
383.0 |
1934 |
190.4 |
1958 |
239.0 |
1983 |
392.0 |
1935 |
215.9 |
1959 |
221.9 |
1984 |
415.2 |
1936 |
250.2 |
1960 |
240.2 |
1985 |
412.3 |
1937 |
276.7 |
1961 |
231.8 |
1986 |
419.0 |
1938 |
267.7 |
1962 |
242.4 |
1987 |
445.1 |
1939 |
266.0 |
1963 |
250.8 |
1988 |
460.8 |
1940 |
275.7 |
1964 |
249.5 |
1989 |
474.5 |
1941 |
267.0 |
1965 |
251.0 |
1990 |
485.7 |
1942 |
249.6 |
1966 |
253.1 |
1991 |
503.9 |
1943 |
217.0 |
1967 |
266.7 |
1992 |
473.8 |
1944 |
186.2 |
1968 |
275.3 |
1993 |
453.0 |
1945 |
157.0 |
1969 |
290.5 |
1994 |
446.9 |
1946 |
129.0 |
1970 |
301.7 |
1995 |
483.0 |
1947 |
156.8 |
1971 |
294.7 |
1996 |
491.0 |
1948 |
173.2 |
1972 |
301.5 |
1997 |
520.7 |
1949 |
173.8 |
1973 |
308.0 |
1998 |
544.0 |
1950 |
203.0 |
1974 |
294.9 |
1999 |
548.5 |
1951 |
199.1 |
1975 |
294.3 |
2000 |
587.3 |
1952 |
216.8 |
1976 |
316.4 |
2001 |
611.8 |
1953 |
216.4 |
1977 |
340.3 |
2002 |
607.4 |
1954 |
214.2 |
1978 |
344.4 |
2003 |
611.2 |
1955 |
223.4 |
1979 |
346.0 |
2004 |
634.4 |
Total |
5.2535B |
Total |
7.7114B |
Total |
12.1075B |
Total (1931-2004) |
25.07 billion ounces |
Note: I noticed that reported production totals underwent
slight variations as the years passed. |
*Free World:
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:
- Listed in order of estimated silver production, the Communist World consisted
of: U.S.S.R, East Germany, Czechoslovakia, Romania, China, North Korea, and
Poland.
Russia contributed the vast majority of the above group's silver production,
mining an estimated 80% of their cumulative total in 1939 (25M ounces).
- Russia's share increased to 38M ounces/year by 1970 (the others remain
much the same)
- Russia's share increases to 43M ounces/year by 1975 (the others remain
much the same).
- Russia's share increases to 46M ounces/year by 1979 (the others remain
much the same).
- Russia's share increases to 48M ounces/year by 1989 (the others remain
much the same).
- Beginning in 1991 Russia's share begins to decrease, and in 2004 they produced
only 37.9 M 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.
Compiling All of the Above Data...
Time Period |
Production |
3000BC-1492AD |
Est. 7.6 B |
1493-1930 |
14.97 B |
1931-2004 |
25.07 B |
Grand Total |
42.62 billion ounces |
Cumulative Silver Production = 47.64 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)
The
History of Silver (3000BC-1492)
Time Period |
Production |
3000BC-1492AD |
Est. 7.6 B |
Continuing from The
History of Silver (1493-1900)
Time Period |
Annual Production |
Total Production |
1493-1499 |
Est. 10 million ounces |
0.07B |
1500-1600 |
Est. 16 million ounces |
1.62B |
1601-1800 |
Est. 20 million ounces |
4.00B |
1801-1875 |
30 million ounces |
2.25B |
1876-1899 |
120 million ounces |
2.88B |
Total |
|
10.82B |
United States Geological Survey (USGS) Data (Link)
The Silver Institute (1995-2004)
Time Period |
Total Production |
1900-2002 (USGS) |
29.3B |
2003-2004 (Silver Institute) |
1.25B |
1900-1994 (USGS) |
24.8B |
1995-2004 (Silver Institute) |
5.64B |
Total 1* (1900-2004) |
30.55B |
Total 2** (1900-2004) |
30.44B |
Combined Average
of Totals 1 and 2 |
30.50B |
*Total 1: Using Silver Institute data for years 2003-2004
**Total 2: Using Silver Institute data for years 1995-2004 |
Compiling All of the Above...
Time Period |
Total Production |
3000BC-1492AD |
7.6B |
1493-1900 |
10.82B |
1900-2004 |
30.50B |
Grand Total |
48.92B |
Cumulative Silver Production = 48.92 billion
ounces
Source 5:
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
A Complete Summation of the Silver
Data
Source # |
Cumulative World Production |
1 |
42.97B |
2 |
47.64B |
3 |
44.75B |
4 |
48.92B |
5 |
43.50B |
Combined Average |
45.556B |
Average Cumulative World Silver Production = 45.556 billion
ounces
Cumulative World Gold Production
http://minerals.usgs.gov
/minerals/pubs/usbmmyb.html
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):
http://www.fgm r.com/gold.htm
Click HERE to View the Pie
Chart
From Above Chart (Link):
"113,571 tonnes historical production less 10,854 total attrition = 107,717
tonnes." (Year-end 1996)
Below: Production numbers obtained from http://www.
dailyfutures.com/metals/
Year |
World Mine Production |
2004 |
79.4 million ounces |
2003 |
83.3 million ounces |
2002 |
83.3 million ounces |
2001 |
84.3 million ounces |
2000 |
83.1 million ounces |
1999 |
81.7 million ounces |
1998 |
79.1 million ounces |
1997 |
77.5 million ounces |
Total (1997-2004) |
651.7 million ounces |
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
Source 2:
http://www.gold.org/value/
markets/supply_demand/mine_production.html
"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
Source 3:
http://minerals.usgs.gov/minera
ls/pubs/commodity/gold/gold_mcs05.pdf
"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. 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):
From: http://www.gold.o
rg/discover/knowledge/aboutgold/gold_prod/index.html
"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."
Year(s) |
Yearly Production |
Total Production |
1848-1851 |
Est. 260 tonnes |
1,040 tonnes |
1852-1886 |
Est. 300 tonnes |
10,500 tonnes |
1887-1890 |
Est. 400 tonnes |
1,600 tonnes |
Total |
|
13,140 tonnes |
Total (in ounces) |
|
422.46 million ounces |
Minerals
Yearbook 1932-1933
Year(s) |
Gold Production |
1891-1900 |
51.28 million ounces |
1901-1910 |
182.89 million ounces |
1911-1920 |
206.11 million ounces |
1921-1932 |
231.30 million ounces |
Total |
671.58 million ounces |
US
GS Data (1933-2002)
Year(s) |
Gold Production |
1933-2002 |
96,279 tonnes |
Total (in ounces) |
3.0954 billion ounces |
GFMS
Data (2003-2004)
Year |
Gold Production |
2003 |
83.33 million ounces |
2004 |
79.22 million ounces |
Total |
162.55 million ounces |
Above Totals |
Year(s) |
Gold Production |
1848-1891 |
.42246 billion ounces |
1891-1932 |
.67158 billion ounces |
1933-2002 |
3.0954 billion ounces |
2003-2004 |
.16255 billion ounces |
Total (1848-2004) |
4.35199 billion ounces |
Since an estimated 90% of all the gold ever mined was mined after 1848 (Gold
History):
4.35299 billion ounces/.90 = 4.8355 billion ounces x .8875 = 4.29 billion
ounces
Cumulative Gold Production = 4.29 billion
ounces
A Complete Summation of the Gold Data
Source # |
Cumulative World Production |
1 |
4.06 billion ounces |
2 |
4.37 billion ounces |
3 |
4.28 billion ounces |
4 |
4.29 billion ounces |
Combined Average |
4.25 billion ounces |
Average Cumulative World Gold Production = 4.25 billion
ounces
Ratios: What Nonsense they Reveal
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:
45.556 billion ounces of silver/ 4.25 billion ounces of gold = a 10.7 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 overvalued 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.