When the world starts to move into the precious metals to protect wealth, silver will be the better investment over gold. Why? I will explain in a minute. However, the question that I receive the most from my followers and subscribers is, “What percentage of precious metals holdings should be in gold and silver?” While I cannot provide financial advice, what I can say is this… due to the real SUPPLY & DEMAND forces in the future, silver’s value will outperform gold by a wide margin.
And, when we look at the supply and demand factor for silver, we must consider the largest component of the market, industrial demand. For decades, analysts have shunned silver because of the typical knee-jerk reply, “Silver is just an industrial metal.” Even many of the individuals who belong to the “Elite Gold Club” also scorn silver as they say, “It is not a monetary metal.” I won’t mention names, but the Elite Gold Club Aficionados couldn’t be more wrong.
Silver is just as good as gold because they both are STORES OF ENERGY EQUIVALENT VALUE. However, the energy equivalent value isn’t the only factor that determines the value of each. We also must include the “Available quantities of each metal.” For example, in ancient times, if the society had two times more silver than gold, the value of gold was set at twice that of silver. It didn’t matter if gold may have cost ten times more in energy cost (human & animal labor) to produce; the value was based upon the prevalent total supply of each in the market-society.
I believe we are going to experience the same GOLD-SILVER SUPPLY & DEMAND dynamics again in the future.
So, if the supply and demand dynamics play a role in determining the value of silver in the future, we must understand how much silver has been lost in the industrial sector. As I have stated several times in previous articles and videos, we can thank silver for its industrial demand component because a massive amount of supply is now lost forever. Some analysts suggest there is a great deal more silver in what they label as “Above-ground inventories” in the world but fail to mention that the majority of that amount is locked up in industrial components-equipment and landfills never to be recycled.
To provide an estimate of the lost silver supply from the industrial sector since 2000, I looked at the data from the Silver Institute’s World Silver Survey’s and the Metals Focus 2015 Silver Scrap Supply Report. This is just a basic estimate, which I will revise in more detail for SRSrocco Report Silver & Gold Members in an upcoming report.
However, since 2000, the Industrial and Photographic sectors of the silver market consumed 11.5 billion oz of silver. The estimated total recycled silver from the industrial and photographic sector was approximately 3.5 billion oz. In the last two decades, 8 billion oz of silver supply is likely lost forever.
Thus, 70% of total Industrial and Photography consumption over the past 20 years is no longer available to the market. I believe, gone forever… or let’s say, the overwhelming majority of that 8 billion is likely lost forever.
Now, if we add up the total silver demand from 2000 to 2020, it equals a bit more than 20 billion oz. So, with 8 billion oz of the 20 billion unavailable to the market, that equals 40% of the total market is now somewhere in SILVER HEAVEN. Compare that to only 7-8% of the gold supply lost in the industrial-technology sector over the past decade (2010-2020). I will also include my estimated lost gold supply in the upcoming report.
Silver investors should rejoice that the shiny metal has been shunned as just an industrial metal by analysts. These same analysts are clueless about the coming ENERGY CLIFF and its impact on the global economy. Because so much of the silver mine supply has been lost by industrial consumption, it will provide investors with a RARE OPPORTUNITY. And that opportunity is to invest in a metal that will outperform gold, regardless of what the Elite Gold Club Aficionados say otherwise.
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Silver will outperform… granted. The problem with silver is shear volume (and thus weight). If you try to invest heavily in the metal you’ll wind up with a crapload of it (at current prices) which in turn takes up a lot of room in your safe and weighs considerably. What to do with it?? Bury it in the back yard… doable but not an ideal option. Safe deposit box… NO! I know… invest in 100oz. bars, paint them brown, and build an outdoor kitchen with them… no one will ever suspect.
Dear Rafo, If this is the only complaint you’ve got against physical possession silver, then I think your life is blessed. I have monster boxes of American SEs [weight per box about 40 pounds] tucked away in a corner of the house, each box labeled “Dad’s antique machine parts”, and no one has given them a second glance. For the peace of mind of having real money with no counter-party risk, I think the concerns you share in your post are inconsequential to the rewards physical possession offers.
I have a friend in the south who sold his business in the late 1990’s and spent it ALL on 1000 oz. silver bars. It took him 4 months to buy it all through a bank, 3 trips home in spite of a panicky manager. He painted them black and laid them as the first course, 18″ down, of a brick flower bed in front of his house. It’s remained undisturbed for a quarter century and nobody outside of two friends know about it. Hidden in plain sight.
Shiny metal good for catching stupid fish.
For now silver behaves as an industrial metal, but in the future it may acquire the properties of a monetary metal. One has to wait untill the current crisis exacerbates.
spectator,
I couldn’t disagree more. Since the beginning of the year:
COPPER = +7%
SILVER = +47%
Silver is not behaving like an industrial metal.
steve
Silver went down together with other assets in march 2020.Copper went up from $2000 to $3000 between March and September 2020. So silver is correlated to other industrial metals. It would be an interesting asset when it becomes negatively correlated to broder markets.
spectator,
If the world was run by ENERGY TOOTH FAIRIES, your assumption would be correct. So, if you can find a few of those ENERGY TOOTH FAIRIES that can make OIL out of THIN AIR, please send those my way.
steve
Thanks Steve, I think silver has a much better chance of getting to $100 before Gold hits $8,000. Maybe silver hits $100 when Gold is at the same time $3000. I much rather have a 400% gain vs 50% gain from here forward. The funny thing if this happens would be to watch the talking heads on CNBC all focused on the 50% gold gain and saying very little about the bigger gain in Silver. But we know their show is all about pumping the ponzi stocks.
Steve, the current bull market will be over when G/S ratio reaches 20-30. How many years will it take to reach the top in your opinion?
If/when it gets to 30 to 1, that would be a good time to convert a substantial % to Au.
Mehmet, Thanks for the good wishes…. I’ve been blessed with the life God for sure. And thanks for the link…. interesting. Even though silver is more abundant in the earth, as we all have read over and over, but the fact that Steve and these other folks talk about usage compared to gold, it seems common sense will/should take over eventually. And DC, when that ratio gets to 30/1, I’ll be standing in line at the coin shop. Never did it before, but these nights when I get up at 3 to take a pee, I always look up the silver price….ha. Hope you all have a great week.
No way. Try 10 to 1. Silver will overshoot the GA Ratio like nothing the world has ever seen.
James you Know that will happen!
Question is…. do we have the Balls to go the distance? Put that blindfold on, plug your ears! & hold on!!!…. Here we go!
And the irreversible loss of silver is still continuing at full steam and will be doing so in the foreseeable future, Steve.
Silver investors and stackers aside, our Ag-dependent global industry gobbles up silver 7/24, at a rate of 45-50 tons every day. Nearly all of this ends up in Silver Heaven.
What I am dying to learn is: What will these Ag-killer industrial titans do in order to survive, when the eventual silver SCARCITY hits with full force ? Yes, one day there will be a scarcity, for sure. For which many reasons exist: decreasing ore grades, Energy Cliff (in fact, this alone is enough), COVID-19, trillions of dollars chasing the very little Ag left above ground when the global bond/derivatives market (size: at least 2 quadrillion dollars) goes up like an H-bomb, frantic buying by individuals, investment funds, central banks, …
When the global industry struggles to find silver for its own very survival, please watch silver prices. That will the greatest fun of your lifetime.
Thumbs Up!
Mehmet, I’ve been blessed with a wonderful life. In between it all, i’ve literally been dragged around the block 1000 times…. makes one stronger. For the last 20 years, been buying silver with my extra money, and it sure adds up. I know the dilemma that Rafo speaks of, but worked out that problem…. just a few thousand dollars in the bank, and some at home….. but I do sleep well at night knowing I have my own bank. And my partner in life, and our two grown and very smart and quiet kids are the only ones that know of its whereabouts. I see silver the way you all see it. It is very hard to spend $2000 on an ounce of gold when I can spend that on a lot more silver, which should go up three times much easier and faster than gold can…… at 69, it would be nice to see it happen….. Just had a triple bypass last year and lost 40 pounds, and doctors say I’ve been the best patient they have ever had……. so, hopefully I’ll be around to see what happens in this crazy world. For those that don’t know, you can buy silver directly from First Majestic Silver… beautiful rounds and bars. Since they mine it, no middleman. One of my favorite ways of buying silver now, and cheapest. And, it always comes UPS 2-day directly to your home, with signature required. And, if you own at least 500 shares of their stock, you get a 50 cent discount on each ounce….. the savings really add up. I still buy from my local guy also. Good luck to you all.
Ron, thanks a lot for your concise account of a marvelous life and words of wisdom. As regards silver, I couldn’t agree more. And yes, my silver makes me sleep very well, too.
I believe -and sincerely wish- you’ll be around for a very long time and see what this wonderful metal, essentially a Divine gift to Mankind, will do.
Best.
Ron, as you say, silver is ALWAYS preferable to gold. It is much less expensive and has a better long term track record than gold:
https://www.munknee.com/silver-bulls-visualizing-the-price-of-silver/
I believe past highs of silver will be dwarfed by the future prices that’ll form when Global Industry starts to have difficulty in obtaining its much needed silver: 50 tons/day. Energy Cliff is coming (plus many unpleasant factors I’ve just outlined, all of which will negatively impact silver availability).
Anybody takes in consideration technological progress? One sunny day you will find some kind of material, that costs very little and has close to zero electricity resistance. Success of new materials is amazing and it progress at accelerating pace.
Taking into consideration technological progress is not the same as changing the properties or laws of chemistry and physics.
Anything is possible Racoon, and I’m no geologist, but I would think every element on this earth has already been found…..and that has crossed my mind, but I’m more inclined to believe that if something was have better properties than silver, there would be far too little of it to use as we presently do. So, I guess I’ll just keep spending that fiat on silver. One thing for sure, it will never be worthless(in a normal world)….
thank you steve for your precious info and also for having been able to satisfy everyone in terms of report not sure that there are many who would have had this delicacy
I think silver stands in a class of its own among all the metals. It’s an industrial metal but you can’t place it beside copper or nickel, there is much less supply and silver has qualities and uses that no other metal does, including all precious metals. Industrial or monetary, however people want to view it, the supply is going down.
A lot of us here moaned and groaned the last ten years about the price staying low, but it was a heck of a buying opportunity we’ll never see again. All the loose supply dealers had laying around for $15 oz has dried up and it ain’t coming back. I guess you could call the first six months of this year phase one of the great silver round-up. Phase two is probably the $40 range which should bring out the sellers. This time it won’t just be the Hunt Bros trying to corner the Mkt. There is plenty of printed cash out there burning a hole in the billionaires pockets.
Very good summation Brant. Every time I say I’m through buying, I always end up buying more…… what else is one going to spend that fiat on(that will last)?
Political contributions?
LOL!
Ronald: “Every time I say I’m through buying, I always end up buying more.”
I just told my local dealer that today! For about the 10th time.
When I see our current system coming to a close, I often ask myself what will the next system look like. Since oil will probably be less available than it is today, it stands to reason many people will be doing manual labor. Manual labor is very common in nations that don’t have easy access to petroleum products. I stack silver so that my loved ones don’t have to do hard labor for a living. I’d like to give them options.
Saying all along that while there would be ‘skirmishes’ all along the way, that the real battle will be SILVER busting through $36 and that I am expecting fairly soon to see a SILVER Bid of $45 at the same time we see SILVER Ask of $56. Strange. Very Strange, I know. I’m now setting my sights on another battle that will be keeping spot Silver under $60. This battle won’t be nearly as long in duration as the break through at $36, because after hanging that six it’ll be clear to all that THERE IS NO SILVER to be had, & there’ll be no looking back. SILVER’s battle to take $60 will be spectacular!
It will be interesting to see what transpires: I have know knowledge or intuition on the subject.
Except I think a lot of people who have personally overbought may be willing or need to let some holdings go to pay for things they need and want.
But deep pocketed entities will buy that up.
DC, We have traded in gold & silver three separate times for a downpayment on a house. Never had remorse….. we do what we need to. And the two nephews that came over for ribs later, they are both playing the guitar and having a great time. And, they are making a pact to each save $25 a week this next year for a trip to Vegas…. we all live in Florida…… unfortunately, they, and tens of millions will wish they had spent that on silver all these years so when the SHTF time comes, there is something to fall back on. That is why we have been buying it, I guess….. for the future, in case. And you are right also DC about the elites buying it up. My coin guy has fixed me up with a couple of these very rich guys…… they bought our gold/silver that we sold for our down payments, at spot price, in cash. Honestly, it did hurt for a day or two, to have to depart with some. But the homes were well worth it. It is good to have a bartarable(prob no such word) tangible item or skill to use when needed…..
I will not sell my silver or gold unless I lose everything else.
It will be the last thing I ever sell.
I learned at a very young age you only get to sell something one time and it is gone.
I have been stacking for years and hopefully never have to sell any until it can be traded for a way higher item than what I paid. Fiat is needed to live I am looking for land when this all goes down.