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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47 Comments on "2015 SILVER EAGLE INVESTMENT DEMAND: Continues To Be The Big Winner"

  1. 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 great work,
    Frank

    • DaleFromCalgary | February 11, 2015 at 2:22 pm | Reply

      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.

  2. 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?

  3. 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.

  4. 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.

  5. 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?

  6. 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.

    • 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.

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

  8. 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.

  9. 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$) by 4.5, in theory the price of silver should be 266$ 😉

  10. 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?

    • K Solomon,

      The majority of that 4,900 mt of silver goes into industrial silver demand, jewelry and silverware. So, no… there isn’t much left over for silver investment. That’s the irony of it all. If every American bought just 1 ounce of silver (320 Moz) it would put severe stress on the global silver market.

      steve

  11. “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.

    Ever since then, Sprott hasn’t bought silver for the Trust in a few YEARS now! What does that tell you about what real total demand is? it is very low right now overall……remember that US Mint sales are only 5% of the market so you can’t glean that much from the much bigger silver sales than eagle sales other than you buy a 1oz of silver for 17, 1 0z of gold is still 1,200+.

    So….the ratio doesn’t tell us much if the mint is 50x or 20x more silver sales than gold because it is a very small sampling.

    No one has been able to break the silver market for decades. And no one is likely too for another decade or two.

    This is all why I KNOW the Russia thing is just a distraction from economic realities. Because if Russia really wanted to counterattack……they would put their excess reserves in silver and break the market. But they clearly plan on letting the Crimex do whatever it wants.

    Therefore, as a silver investor, you will be screwed for a very very very long time…..and you will get no income or dividends along the way.

    Frank

    • 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.

  12. 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,

      Canadian Silver Maples to Gold Maples Q1-Q3 2014 sales were:

      Silver Maples = 20,800,000
      Gold Maples = 474,000

      Silver-Gold Maple ratio Q1-Q3 2014 = 44/1

      steve

      • Steve,

        Thanks for the reply. I was amazed by your enthusiasm. I am happy that I found someone that I can talk about precious metal as family around me laugh at me on my precious metal investment. Under the overhelming pressure from the Fed and its partner banks,Its a tough time for PM investors.Nobody take PM seriously now. The average Joe won’t jump into the PM market until very late and normally that means the party is almost over. That’s human nature and you cannot do anything about it. I will just use that as a indicator of when I should withdraw from the PM market…though. which I expect to be around $150~200 per oz for silver and $6,000~7,000 per oz for gold and about 5~7 years from now.

  13. 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.

    • Bill,

      Your assumption about a recovery of the global economy in 3 years make sense on FACE VALUE, however… PEAK OIL is here now. We may see Global Peak oil in 2015. If the price of oil remains in the $50 range in 2015, I would imagine U.S. oil production will peak this year.

      So, we can forget about any GLOBAL RECOVERY if oil production heads south…. FOR GOOD. Thus, this is the EXACT REASON to own silver and gold.

      LET ME BE A BROKEN RECORD: The worlds paper assets such as Stocks, Bonds, Treasuries and Annuities are based on NET PRESENT VALUE. This assumes a certain amount of growth in the future. When PEAK OIL arrives, than growth is over. When the world wakes up to PEAK OIL, then the LIGHT WILL GO OFF in their heads and the market will move into physical assets such as SILVER to protect wealth as paper assets implode.

      The ORTHODOX view of Supply-Demand forces for a growing economy will GO DOWN THE TOILET….. FOREVER.

      steve

      • “So, we can forget about any GLOBAL RECOVERY if oil production heads south…. FOR GOOD. Thus, this is the EXACT REASON to own silver and gold. ”

        The fallout seems a ways off still according to the Shell CEO: Oil price recovery could “occur if projects are postponed or even canceled,” he said in prepared remarks. “This would lead to less new supply—not so much now, but in two or three years. Combined with economic growth, the market could tighten quickly in this scenario.”

        • frank,

          The world has a 5% annual decline rate in its existing oil fields. At 77 mbd of conventional and condensate production that’s nearly 4 mbd lost each year. And it’s worse than that. All the new production over the past decade has come from DEEP WATER, SHALE and TAR SANDS. Let’s forget that garbage called Tar Sands and concentrate on the other two.

          Deep Water and Shale Oil suffer very high annual decline rates. Deep Water is something like 15-25% and Shale is 40-70%. So, the new oil projects are declining faster than the ones that came on in the 1970’s, 1980’s or 1990’s.

          So, the CEO of Shell is talking out of both sides of his mouth. We must remember, the MAJOR OIL companies started cutting CAPEX & EXPLORATION back at the end of 2013, because the new projects require $120 oil. They realized the market would not pay for $120 oil. So, that took place nearly a year and half ago and that was when the price of Brent was $105.

          So, at $50.. it makes things much worse. PEAK OIL is here. If we have to wait a year or so, it doesn’t really matter as humans live 70-80 years.

          steve

          • Thanks for the reply and numbers. Why is it do you think the world completely ignores this then? Why is it that something this BIG is being pushed under the rug like it doesn’t exist?

            So long as the oil produces produce “net energy” then shouldn’t the Presidents Group on Financial Markets be ramping spot oil higher? Especially since the bigs are all laying off, cutting ca-ex as you note, etc.? That won’t help and will only hasten the day….

            So what gives? Even the President seems very relaxed lately.

      • lastmanstanding | February 14, 2015 at 8:11 am | Reply

        A revalue in usd could have been preceded by the drop/devaluing of oil. Perhaps oil at $50-55 ish is a precursor to a 50% devaluation of the dollar as some are saying…this would be the same as oil at previous price of $100-110.

        I am wondering if they are gently phasing the sheep out of fuel with cheap fuel?

  14. 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.

  15. “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

  16. 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.

    • OutLookingIn,

      I have heard a lot about the STOCK to FLOW ratio, but I don’t know how much I regard it as a tool for price or etc. Let me ask you this. What do those numbers 74 and 52 mean exactly?

      steve

      • I gather those numbers are derived from the following:

        Divide total mined by annual production, arrive at a stock to flow ratio in years it would take to double the total stock, at current rate of production.

        • p.s. Could it be an estimation of total silver diminishing at an ever increasing pace?

        • OutLookingIn,

          The reason I don’t pay too much attention to the STOCK to FLOW ratio is due to the fact that the world is entering a COLLAPSE due to the GLOBAL PEAK OF OIL PRODUCTION. If we had another say 2-3 decades of world oil supply growth, then maybe STOCK to FLOW would be a tool worth looking at.

          In my simple logic, the Peak and Decline of global oil production will destroy the valuation of most paper assets which mirrors about the same amount of world debt. Both Paper Assets and Debts will not be settled or paid off.

          So, in that vein… there will come a time when the world moves into owning HIGH QUALITY PHYSICAL ASSETS. And most of the typical physical assets today deemed as INVESTMENTS, will become liabilities in a peak oil environment. Those physical assets that are PAID IN FULL, highly liquid and not based on future energy production to acquire value will be the most sought after.

          I believe physical GOLD & SILVER are the top assets to own in this class.

          steve

          • So in that vein, a water powered grist and flour mill would be a highly desireable asset to own? Or a small hydo electric power generating station? Maybe a horse breeding farm, specializing in draft animals?

  17. 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.

    • “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 a multiplier can’t be known by anyone.

      I’ll be $100 worth of silver bought right now, if exchanged 5-10 years from now [or less] for whatever currency exists, or even food, gasoline, clothing, shoes….will buy more than than $100 invested in anything else the public has access to legally investing in. Maybe some mining stocks will exceed physical silver performance if these companies or their mines aren’t nationalized.

      Maybe some semi-legal purchases [at least in some areas] like premium ammunition or “assault-style” or high-capacity firearms may do better. But sale of them may [as is already happening in some areas] may be illegal.

      If possession of gold or silver outside of jewelry form is made illegal I suspect 99% of bullion owners will in essence say “screw you” to said authorities, as this would be an immoral law.

      And a thriving black market would spring up.

      • 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.

        • 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.

  18. 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 it is to cheap for them, They buy art for $300 million (the latest record amount paid for a painting of Gauguin).

    The move into precious metals is in some sense motivated by the desire to preserve the purchasing power of savings in an uncertain future of declining resources, especially oil (peaking of production followed by a decline of oil production). 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). This is indeed a shocking conclusion which nobody wants to talk about. Listen to lectures of professor emeritus Guy McPherson available on youtube to learn more about that threat.

    • 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.

    • “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 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.

      Sure, if we have a doomsday scenario on our hands, whether climate change or the eruption of the super-volcano underneath Yellowstone National Park, or we get nuclear bombs dropped on us we are all screwed no matter how much we have tried to prepare for the future.

      • “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 preparation should be for eternal first and physical secondary.

        • “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.

  19. 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 back strong because USA has somewhat a de-centralized structure politically: every individual state does reserve certain power and every individual citizen still reserve its own rights much more than the chinese.

    china’s influence on the world is very much exaggerated. a lot of poor chinese still want to come to the states to make a better and easier living. in recent years, when USA relaxes Visa rules to chinese citizens, populations in chinese communities across USA are booming. china’s 95% won’t ever have a chance to be middle-class according to world standard. china will sink into greater chaos much more than the west.

    i believe PM will have its days. but china won’t be the savior.
    it’s the sane ppl in the west who will save the world.

    this bull market is much more painful because the time span is doubled as compared to 70s bull run.

    but we should all hang on tight!

    jude

  20. 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.

    • 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.

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

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