2015 SILVER EAGLE INVESTMENT DEMAND: Continues To Be The Big Winner

As the global financial system continues to disintegrate under the weight of massive debt and hyper monetary printing, investors choose to purchase a great deal more silver than gold.  While this trend continued to get stronger over the past several years, it hit a record high ratio in February.

From 1987 to 2000, the U.S. Mint sold 15 Silver Eagles for every ounce of Gold Eagles.  Then from 2001 to 2007, this nearly doubled to 29 Silver Eagles for every ounce of Gold Eagles.  However, after the collapse of the U.S. Investment Banking and Housing Industry in 2008, this ratio continued to increase:

Gold Eagle vs Silver Eagle Sales 1987-2014

From 2008 to 2014, the rate of Silver Eagle to Gold Eagle sales jumped to 41 to 1.  What is even more amazing than that statistic, is the Silver to Gold Eagle ratio in 2014. Investors purchased 84 Silver Eagles for every Gold Eagle oz in 2014.  The U.S. Mint has not released its 2014 Annual Report, but I would imagine total Dollar sales of Silver Eagles was probably higher than Gold Eagles last year.

Now, if we look at the current demand for U.S. Mint official coins, Silver Eagle vs Gold Eagle sales in February are a staggering 213 to 1:

FEB Silver vs Gold Eagle Sales 2014.NEW

In the first ten days of February, the U.S. Mint sold 1,389,000 Silver Eagles compared to 6,500 Gold Eagle oz.  This 213/1 Silver to Gold Eagle buying ratio is quite significant when we compare it to global mine production.  Using data from GFMS 2014 Gold & Silver World Surveys, total world silver production was 820 million oz (Moz) in 2013 compared to 97 Moz of gold production.

Thus, the world produced 8.5 oz of silver for every ounce of gold in 2013.  I would imagine this ratio will be about the same this year.  So, as the world produces 8.5 times more silver than gold, the U.S. Mint is currently selling Silver Eagles at more than 200 times the rate of Gold Eagles. 

Furthermore, the USGS just released its 2015 Silver Summary showing the United States silver production increased to 37.6 Moz in 2014 compared to 33.4 Moz in 2013.  Even with this 4+ Moz increase of domestic silver production in 2014, it was less than the total amount of Silver Eagles sold by the U.S. Mint last year.

The U.S. Mint sold 44 Moz of Silver Eagles plus an estimated 2+ Moz of proofs and additional official silver coins for a total of 46+ Moz in 2014.  Which means, total U.S. silver mine supply is 8+ Moz less than the demand from its official Silver Coin program.  This isn’t much of a problem for the United States currently as it imported 4,900 metric tons of silver in 2014.

However, when the world finally loses faith in the Fiat Monetary System and the U.S. Dollar is devalued, there will be a great deal more demand for silver.  As future global demand for silver increases, it could put real stress on U.S. silver imports.  This will have a two-fold impact:

1) U.S. Silver Imports may decline

2) Demand for Silver Eagles will increase

The world has no idea just how bad the situation will become when the highly leveraged debt-based paper financial system implodes.  Fortunately for a small percentage of investors… THEY GET IT.

Which is why we are seeing record 200 times the Silver Eagle buying compared to Gold Eagles. While GOLD is known as the King of monetary metals, SILVER will win the crown as the best performing monetary asset in the future.

On a side note, a few readers have emailed me in the past stating that I failed to include U.S. Mint Gold Buffalo sales.  They believe I am overstating the Silver-Gold buying ratio as I do not include Buffalo sales in these calculations.  To set the record straight… they are correct.  However, Gold Buffalo sales don’t change the ratio all that much.

For example, the U.S. Mint sold 177,500 Gold Buffalo coins in 2014.  If we add this to total Gold Eagle oz last year, we would arrive at a total of 702,000 oz.  Dividing 44 Moz of Silver Eagles by 702,000 oz of Gold Eagles & Buffalo coins is a ratio of 63 to 1.  Furthermore, 5,500 Gold Buffalo coins have been sold in February and if we add them to the 6,500 oz of Gold Eagles, we have a total of 12,000 oz.

Dividing 1,389,000 Silver Eagles by 12,000 Gold Eagles & Buffalo coins, we get a ratio of 116 to 1. This is still more than 13 times the global silver to gold mine production ratio.

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frank
Guest
frank

Yet the silver/gold ratio expands? We live in an upside down world. If EROI is declining and depletion rates are what they are—wouldn’t the spot price of oil be skyrocketing to account for this future? If one of the most connected of all companies in the world Halliburton is laying off, what does that tell us? BTW, Sprott has pointed out that silver eagles have outsold gold forever–and it hasn’t mattered. The pricing in gold and silver in just so rigged that they will most certainly make new purchases illegal if it EVER gets away from them. Thanks for the… Read more »

DaleFromCalgary
Guest
DaleFromCalgary

Oil isn’t skyrocketing because of demand destruction due to the ongoing Great Recession. Because so many government statistics are deliberately mis-stated, conventional investors are misled. The sudden collapse in oil prices isn’t because the Saudis are pumping more oil. It’s because shale oil producers were flooding the market at $80 per barrel. The price of oil, like most commodities, is determined at the margins. As soon as both the market and storage tank farms were full, the final barrel at the margins had to be discounted. That set off a race to the bottom once traders realized the situation.

frank
Guest
frank

Dale,

I hear what you are saying. I knew all that already. But the thing is…..in a world that will soon not have enough oil, whether it is 2 years or 5 years……a 50%+ haircut in 6 months on spot crude seems overdone then, no?

And if the falling EROI is right, along with depletion from the Shale in the not so distant future….then would the spot price of oil make a better 1-2 year investment then gold or silver?

GermanReader
Guest
GermanReader

Steve thanks for this enlightening report. The ratio of gold to silver production 8.5 now. Steve do you know the historic gold to silver production rate ? I think it would be very interesting to know the production rate of this to precious metals in times when silver was not 70% byproduct as it now.

Anthony
Guest
Anthony

Yet, on a mainstream investment website today I read in I quote: “Silver’s 9% rise in January ignites heavy selling as retail selling pressure increased substantially.” I’ll give them the benefit of the doubt and assume they were talking about paper silver being shuffled back in forth in the futures pits.

MathGuy
Guest
MathGuy

When I divide the world silver production (820) by the world gold production (9.7) I get 84.5. Where does your 8.5 number come from?

frank
Guest
frank

This is a serious question: With such a grip on the COMEX market, the fascists are making the price action WORSE than Chinese torture. They KNOW exactly what they are doing.

Other than EROI someday falling to obscene levels (probably 15-20 years from now) someday, why will they ever lose their grip on Gold and Silver prices.

Mike
Guest
Mike

Because at some point you reach a criticality where enough people don’t believe the price and will not let go of their metal. At that point another market price is set, even if it is just expanding premiums over the COMEX price. Also keep in mind that if Russia or China introduce a gold backed currency, then they will almost certainly do it in parallel with a valid physical market. If they did not then the COMEX would control the value of their currency.

Joe
Guest
Joe

Let’s not forget that industrial use of silver cuts into the available supply.

frank
Guest
frank

Sure, industrial supply big indian imports of silver last year, record eagle sales, and now a year over year decline in mining production……

ALL PRODUCES A DECLINING SILVER PRICE

The fascists will show us for buying silver now won’t they! Gotta let us know they are in charge and all.

David
Guest
David

Joe is absolutely right,
The ratio of gold to silver production is about 8.5
But the ratio of gold to silver AVAILABLE FOR INVESTOR is about 4.5 cause we have to substract the industrial use.

Just for fun, if we divide the price of gold (1200$) by 4.5, in theory the price of silver should be 266$ 😉

K Solomon
Guest
K Solomon

Imports of 4900 metric tons = 157Moz. This is a huge number. More than covers the 8Moz shortfall in US mining supply and US Mint silver bullion production. Balance is more than enough for industrial usage.

If silver is the Achilles Heel, it looks like US Mint silver bullion uptake has to triple before we see any silver shortages. Is my arithmetic/hypothesis correct?

frank
Guest
frank

“If silver is the Achilles Heel, it looks like US Mint silver bullion uptake has to triple before we see any silver shortages. Is my arithmetic/hypothesis correct?: Eric Sprott is heartbroken over this. His Sprott Silver Trust did a secondary and it took a bit to get the silver. He went out of his way telling his story how getting the last silver bar took “months” and thought that must of meant a shortage was looming…… So he did two more secondaries worth around 300 million each, the silver allotment took no time at all for the Trust to receive.… Read more »

RD
Guest
RD

Silver fate is depending on gold one. PERIOD.

When speculators chase gold, they chase silver even more and the opposite is also true of course.

Industrial demand and supply are meaning less such as physical demand and supply except if the is huge increase on one way or another such 2 or three times plus or minus.

BRICS will maybe do something one day but certainly nothing shortly.

Bill
Guest
Bill

Maybe silver Maple and gold Maple is a better indication as gold eagle is not pure gold. gold investor prefer pure gold so in term of gold, they will choose Maple over Eagle.

Bill
Guest
Bill

silver wont preform well until there is true recovery of global economy, which I expect to be around at least 3 years away. Before that, i am not very optimistic. But it is a good time to acquire for buyer indeed.Esp China to setting up their strategic reserve.

Mike
Guest

The factors you cite, escpecially high global debt and the “hyper” printing of new fiat currency, will no doubt be bullish for silver and gold.

frank
Guest
frank

“The factors you cite, escpecially high global debt and the “hyper” printing of new fiat currency, will no doubt be bullish for silver and gold.”

The trillions in money creation since 2010 hasn’t helped gold and silver at all. And the U.S. is off the hook from consequences of dollar demise now that other countries are all-in.

Frank

OutLookingIn
Guest
OutLookingIn

Steve,
How do these present demand numbers relate, in regards to the silver stock to flow ratio?

The silver stock to flow ratio has been falling since it’s peak in 1951, with a mean average since 1900 at 74. Last time I seen anything on the stock to flow ratio it was sitting at 52. Any info would be greatly appreciated. Cheers.

gig
Guest
gig

Steve, another great article, my conclusion is stackers are not stupid.
If gold silver ratio was 20, I bet buying ratios would shift toward gold.
If PMs are only a store of value, over the long term not much gain is made in relation to the cost of living; however gains can be made over time by trading the ratio.

David
Guest
David

“If PMs are only a store of value, over the long term not much gain is made in relation to the cost of living; however gains can be made over time by trading the ratio.” They are a store of value. They are a store of buying power. And in the future they will be a multiplier of buying power. And society can function without gold. It can’t function without silver. There are critical sanitation functions of silver [anti-pathogen] that can’t be replaced by ANYTHING else. And many other important functions like the building of any electronics. How much of… Read more »

gig
Guest
gig

I agree with everything you say and can easily tell you are not a stacker that’s stupid.
Wouldn’t be surprised to someday the g vs s ratio at 20-1 instead of current.
But that’s was my point, silver is the better buy.

I only buy one gold eagle per yr just to have something to show my grandkids when someday they ask what is that stuff that made China the world’s financial ruler.

David
Guest
David

I would be surprised if the gold-to-silver ratio doesn’t reach 15 to 1…within 10 years.

I would not be surprised if for a while it gets to 10 to one, or even closer than that.

Robert Happek
Guest
Robert Happek

Nobody has mentioned a simple explanation for the greater popularity of silver versus gold. Silver is more popular because one can buy a few coins for very little money. One has to pay a substantial amount of money for one single gold coin. This is similar to the pricing of stocks. The price of individual stocks is artificially kept (via splitting) at a low range to give buyers the illusion that they are getting many stocks for relative little money. Many people can not afford to buy things in excess of $1,000. The truly rich do not buy gold as… Read more »

gig
Guest
gig

I’m not worried about total extinction simply because it’s not mentioned in the Bible; however honest currency like gold and silver is mentioned.

David
Guest
David

“However, a much larger threat looming on the horizon is the threat of a catastrophic climate change ultimately caused by our century long burning of fossil fuels. If that comes to pass, our real problem is not the loss of purchasing power of money, but the extinction of ALL life on earth (including human life) within a few decades (not centuries).”. Of course there are always other opinions out there than the one person you mentioned, and the data on which he may be basing his opinions. http://www.telegraph.co.uk/news/earth/environment/globalwarming/11395516/The-fiddling-with-temperature-data-is-the-biggest-science-scandal-ever.html But maybe we are on a path to man-made annihilation. With a… Read more »

gig
Guest
gig

“But maybe we are on a path to man-made annihilation. With a background in science myself I will tell you know on knows for sure, no matter how convinced they are. There are people who are absolutely convinced we will annihilate all life with nuclear weapons within a few years, much quicker than climate change could get us.” I agree “no one knows for sure” but am continually a bit amused by those who seem to be fearful of some “man-made annihilation” while daily pulling out on a freeway. Life is short no matter how well one is prepared. IMHO… Read more »

David
Guest
David

“Life is short no matter how well one is prepared. IMHO preparation should be for eternal first and physical secondary.”

They are done simultaneously. One lives theirl life in the best manner possible or they don’t. In genuinely striving to lead the best life possible one is also preparing for all future possibilities or realities, including those after death.

gig
Guest
gig

IMO eternal life is not based on actions, but on belief.

judejin
Guest
judejin

steve, reflecting upon the things happend between 2011 and now, i believe the west is still in firm control of the world and china has caught up with the west in terms of in-debtedness. the biggest problem china has is its political and social structure, the ruling party controls not only the political power but also the economic power. the entire structure is corrupt and tilted towards the ruling party. the centralized power is a parasite sucking dry the host just like the fed-wall-street-DC gang is doing to the USA. i believe USA has better chance to survive and come… Read more »

silverfreaky
Guest
silverfreaky

This bear-market in PM cold even from now one last years.Only Inflation can turn it.But from where Inflation will come?
The controverse is true.

David
Guest
David

It is investor demand that would turn it….when investor demand increases sufficiently. And that is slowly happening. Asian demand will in time break the commodities market stranglehold on a free market price of PM’s.

silverfreaky
Guest
silverfreaky

The “big winner” silver today -5.5% down.Wow!