Many investors believe the value of silver will surge much higher in
percentage terms compared to gold during the next financial and economic
crash. I happen to belong to that savvy group of silver investors, and
for good reason. If we look at the charts below, the data proves that
silver is certainly the more undervalued precious metal asset. Thus, it
will likely make silver one of the best investment strategies of a lifetime.
While some readers may say that this is just more hype, the fundamentals
provide us a pretty clear picture. That is, if we are able to
understand the entire system and how things are likely to unfold.
Before I post these two charts, I want to say a few words about several
emails I have received from my readers over the past week. After I
wrote the article, UNLOCKING GOLD’S TRUE VALUE: The Economic Code –
Finally Revealed, some readers finally understood that ENERGY is
the critical factor in providing value to most goods and services in the
world.
When they find out that ENERGY is everything, the LIGHT-BULBS go off and
they finally get the vital importance. It took me years of research
before it made sense to me. Still, the majority of my readers likely
just skip over it and continue to see energy as just a part of the economy.
Even mainstream analysts separate the Energy Sector from the Health Care
Sector, the Manufacturing Sector or even the Service Industry… so on and so
forth. They look at energy as just a mere segment of the market.
For some strange reason, they believe the Health Care, Manufacturing and
Service sectors are powered by Fairies or Elves. I can assure you, all
sectors of the market are run by energy. Take energy away, and Apple’s
products and stock price would get flushed down the toilet.
When precious metals investors finally realize that ENERGY is the
KEY to everything, they will no longer worry about gold and silver
manipulation, the Federal Reserve FOMC meetings, the One World Government or
dozens of other distractions.
I continue to read and hear about the ONE WORLD GOVERNMENT and how
Globalism is going to rule the world. I would like to kindly remind
those reading this article that globalism was a short-term arrangement only
possible due to cheap and abundant oil production. As U.S. and global
oil production heads south in earnest over the next 5-10 years, globalism
will experience the same fate as the Dinosaur.
Conspiracy theory obsessed Americans in the future will no longer worry
about the Global Elite and their One World Currency (for example), but rather
if their neighbor is stealing their vegetables from their garden at
night. Basically, fear or worry will move away from GRAND CONSPIRACIES
to more practical day-to-day local or regional living situations.
Mark my words on this….
Anyhow, I am glad some readers are finally connecting the dots that energy
is the key to everything.
That being said, there has been a lot of chatter over the years in the
precious metals community that there is more gold investment in the world
than silver. I actually have stated this a few times myself. So,
I thought it would be a good idea to check this out and to see if it was
true.
World Official Gold vs Silver Investment Holdings
If we go by the data from GFMS (Gold Fields Mineral Service), which is now
apart of the Thomson Reuters conglomerate, and the CPM Group, total world
official gold and silver investment holdings are a lot closer in range than I
originally thought.
NOTE: I decided to use the data from the CPM
Group’s 2016 Silver Yearbook because they are the only source that provides
an estimated total for silver.
Of course, this data has to be taken with a grain of salt, but it does at
least provide us with a decent estimate.
The chart below shows that the total “Official” world investment
holdings of gold are 2.25 billion oz versus 2.54 billion oz for silver:
So, if we go by the “Official sources”, there is a wee bit more silver
investment inventories in the world than gold. To understand how I arrived
at these figures, let’s start with the following table:
This was found on Wikipedia, but the source was published by the USGS
based on data from the World Gold Council. Wikipedia also provided
updated Central Bank gold holdings as of June 2016. I then added the
additional 5,000 tonnes of gold bar and coin demand from 2012-2015.
Basically, total gold investment in the world is approximately 70,000 metric
tons (mt). This translates to a cool 2.25 billion oz.
According to the CPM Group’s 2016 Silver Yearbook, they estimate total
silver bar and coin inventories in the world at 2,539,000,000 oz or 2.54
billion oz. They break it down to 1.58 billion in silver coins and 961
million oz in silver bars. This figure looks about right to me, but of
course, it’s an estimate. There could be more silver bullion held
privately that we don’t know about, but that could also be true for gold.
Regardless, there is about 290 million oz more silver investment in the
world than gold. Thus, according to these official sources, there is
13% more silver investment inventories than gold. However, that is not
all that much when we compare the value of both.
I arrived at the total values in the chart above by multiplying a gold
price of $1,350 and silver price of $20 by their total respective
inventories. As we can see, the total value of gold investment
inventories equals $3 trillion versus a measly $50.8 billion in silver.
So, when the trillions of Dollars of Fed liquidity no longer works, as the
monetary crack addicted economy finally crashes, investors fleeing stocks and
bonds will finally find out just how little silver investment there is in the
world. The funneling of massive funds into silver will drive up the
value much higher than gold. Thus, $10 billion dollars flowing
into the world gold investment market will push the total value up one-third
of a percent (0.3%), while that same $10 billion into silver will push up the
total value by 16%. That is, if the price of silver remained
the same.
However, there is one more important factor we need to address here.
What about Central Bank gold and silver holdings?? According to the two
official sources quoted above, Central Banks hold one hell of a lot more gold
than silver (no surprise here):
If we trust the estimates by the official sources, Central Banks hold a
massive 1+ billion oz of gold compared to 46.8 million oz of silver. Roughly,
Central Banks hold 22 times more gold than silver. The U.S. Treasury
and other (mostly) Western Central Banks unloaded their massive silver
stockpiles 50+ years ago, when they (mistakenly) realized silver was becoming
way too valuable to be used as a currency and that it’s citizens wouldn’t
mind using base metal slugs for trade.
OKAY… Clarification Of the World Gold & Silver Inventories
Listed Above & A Few Words For The Grand Conspiracy Skeptics
Let me start with a few words for the Grand Conspiracy Skeptics. I
would imagine many readers rolled their eyes at the information above because
“THEY KNOW BETTER.” Well, maybe they do. For example, some
analysts are stating that the Chinese Govt holds upwards of 30,000 mt of
gold… much higher than the official figure. Furthermore, others believe
the U.S. Treasury holds very little of their supposed 8,133 mt of gold
reserves.
Sure, this may be true, but this gold had to come from existing investment
stocks. If the Chinese do have a lot more gold, maybe a good portion
came from U.S. Treasury stocks or from private investors who still to this
day, don’t realize their allocated or unallocated gold was sold or leased
right out from underneath them. This would not change the overall
figure of physical gold investment, rather it only changes the amount
individual Central Banks or private investors own.
Now, for those individuals who believe in the Grand Conspiracies put forth
by Bix Weir and other assorted Gadflies (really don’t mean to disrespectful
here) that the world has more like 1-2 million tons of gold floating around,
there isn’t much I can say to change your opinion. You are likely to
take that PEARL of a lousy conspiracy to the grave with you.
This is due to the seemingly religious indoctrination of lousy
conspiracies such as Yamashita’s gold, and the massive Marcos gold hoard in
the Philippines. I have looked over the documentation and I could see
why some folks would believe these fanciful stories. However, if we go
by science, we find that it was impossible to mine that much gold unless we
had assistance from space Aliens from galaxies far, far away.
According to the detailed data put out by the U.S. Bureau of Mines 1930
report and the USGS, the overwhelming majority of cumulative world gold
production came since 1900. Why? Because we tapped into massive
oil reserves containing thousands of energy slaves in each barrel. As
global oil production increased exponentially, so did the mining of gold,
silver and just about every other metal. No magic here… just real
science if we allow our brains to absorb facts rather than lousy conspiracy
gossip.
While the figures in the chart are not 100% accurate, I would suggest a
10-20% error of accuracy would be reasonable to assume. Thus, total
world gold production of 166,640 mt could be closer to 200,000 mt. However,
there is no way the world is hiding 1-2 million metric tons of gold in some
cellar, basement or underground Nazi bunker.
While conspiracies do take place in our world, not everything is a
conspiracy. If we use some logic and reasoning, many lousy conspiracies
should be put to DEATH once and for all. Unfortunately, writing about
real and lousy conspiracies is a good way to make a living selling
newsletters. While I have no reservation with an individual making a
BUCK (Dollar) discussing more viable conspiracies, I find the peddling of
lousy conspiracies distracts people from the real problems at hand.
Okay, enough about gold conspiracies… I could go on forever about this
subject matter. Let’s switch to looking at the actual data shown again
in this table:
You will notice how much gold is estimated to be held in jewelry (includes
religious objects and artwork). There’s actually more gold held in this
category than in both investment and Central Bank holdings. While
jewelry is not an actual investment inventory, a lot of that gold jewelry could
come back into the market if the price of gold started to head towards
$5-$10,000.
Matter-a-fact, a lot more gold jewelry makes its way back into the market
each year because the selling or pawning of gold is worth the owners time and
effort compared to silver jewelry:
According to the sources shown at the bottom of the chart, there
was nearly two times more gold jewelry sold back into the market as scrap
supply in 2015 (1,000 mt) versus silver jewelry (551 mt).
So, a good percentage of the gold jewelry held by citizens throughout the
world could come back into the market if the price or value of gold surged
higher.
This would also be true for silver. However, a lot of silver that
was made into jewelry over the years may have been discarded into the
thousands upon thousands of landfills in the world due to its insignificant
value. When Americans get into a CLEAN UP MODE at their house, they
will likely throw out silver jewelry because it’s just a part of the
staggering amount of junk and clutter that accumulates over the years.
On the other hand, if they came across an old gold ring, then of course
they would consider taking that down to the pawn shop so they could head to
Las Vegas for the weekend for a much needed rest from the RAT RACE.
Regardless, most of the available gold on the planet is still held by
citizens throughout the world. However, upwards of half of the silver
is likely gone forever as industrial waste in landfills or still being used
in electrical functions in the hundreds of millions of homes, cars and
electronics throughout the world. Very little of this silver will ever
be recycled.
The Value Of Silver Will Surge Compared To Gold In The Future
The value of silver will surge much higher relative to gold in the future.
This is due to several factors:
- Investment funds moving into silver will push its value
up much higher than gold in percentage terms due to its low price.
- While there isn’t more gold investment in the world than
silver (according to official sources), silver inventories only outweigh
gold by 13%. This is insignificant when we consider its low price
or value.
- There is 22 times more gold held by Central Banks than
silver. When the mad scramble to own precious metals finally takes
place… don’t count on Central Banks to help much with silver supply.
- The public will more than likely move into silver rather
than gold due to its affordability. Thus, the masses will have a
much more profound impact on the price (or value) of silver than gold
There are several more factors I could list, but these are by far the most
important. Furthermore, I could write several additional articles just
on clarifying the official figures in more detail… but it’s more important to
understand the overall trend.
Precious metals will be the go to assets due to their ability to store
ECONOMIC ENERGY. The current $250 trillion in global stocks, bonds,
real estate and insurance funds are not stores of economic energy… rather
they are economic energy IOU’s. These energy IOU’s worked find (sort
of) during the rise of cheap energy production. However, they will
collapse as the opposite takes place.
Check back for new articles and updates at the SRSrocco Report.
