SILVER vs. GOLD: 2 Must See Charts

What is the better investment?  Silver or Gold?  Well, if we look at the following two charts below, we can spot some interesting trends.   The U.S. Mint has been producing Gold and Silver Eagles for over thirty years now.  Since 1986, the U.S. Mint has sold 21.7 million Gold Eagles versus 463.4 million Silver Eagles.  The overall Silver-Gold Eagle Ratio from 1986-2016 is 21.1:

Total-Gold-vs-Silver-Eagle-Sales-1986-2016-NEW

However, if we look at the Gold Eagle sales of 252,500 oz versus Silver Eagles at 14,842,500 for 2016, the ratio is 61/1.  Investors are currently buying Silver Eagles this year at three times the historic overall ratio.  Furthermore, if we break down Gold versus Silver Eagle sales in the following two periods, we can see an interesting trend:

Total-Gold-vs-Silver-Eagle-Sales.NEW

From 1986-2006, the U.S. Mint sold a total of 13.8 million Gold Eagles compared to 148.3 million Silver Eagles.  This 21 year period that took place before the collapse of the U.S. Investment Banking and Housing Markets, shows that investors favored buying Gold Eagles more than Silver Eagles as the Silver-Gold ratio was only 11/1.

However, this changed after 2007, when investors bought a massive 315 million Silver Eagles versus 7.9 million Gold Eagles.  During the 2007-2016 period, the Silver-Gold Eagle ratio jumped nearly four times to 40.1.  In addition, total Gold Eagle sales were less in the second period, but Silver Eagle sales were more than double (148.3 million vs. 315 million).

Here is another interesting statistic.  Let’s compare Gold and Silver Eagle sales versus the total inventories at the GLD and SLV ETF’s:

Gold & Silver Eagles vs. GLD & SLV ETF’s (million – Moz):

Total Gold Eagles = 21.7 Moz

Total GLD inventories = 26.5 Moz

Total Silver Eagles = 463. 4 Moz

Total SLV inventories = 330 Moz

What is interesting is that there are more Silver Eagles held in private hands (463.4 Moz) than the total inventories on the SLV ETF (330 Moz).  On the other hand, there is more gold (supposedly) held at the GLD ETF (26.5 Moz) compared to the Gold Eagles held by the public (21.7 Moz).

Now, we have no idea if the GLD and SLV ETF’s have all the metal they say they do, but I would much rather own physical Gold and Silver Eagles than paper gold shares.

I believe silver will outperform gold significantly in percentage terms in the future.  We can see that investors (large and small) must also agree as they are buying a lot more Silver Eagles than Gold Eagles since 2007.

NOTE:  I will be releasing a new BULLET REPORT on the Gold Market this week.  It provides charts and data on how the recent flows are setting up the Gold Market for a big move in the future.

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28 Comments on "SILVER vs. GOLD: 2 Must See Charts"

  1. Very interesting article as it reflects my actual buying behavior.

    I was late to the party and didn’t start buying PMs until mid 2006. I bought based on how much extra money I had at the end of the month. I stopped buying gold in late 2007 when gold approached $800/oz, and stopped buying silver when it got to $22/oz. When the ratio got to 80/1 I traded 25% of my gold for additional silver figuring if it ever gets back to around 40/1 I would buy back the gold. I will trade the next 25% if the ratio ever gets to 100/1.

    Thanks for all of your work.

    SteveW

    • That isn’t late. Some started with the 2011 run-up in prices.

      • Better late than never. When the SHTF the premium they paid for bad timing will be inconsequential. They will be very happy the got on board.

        SteveW

  2. Do Eagle coin sales have anything to do with the price? Are these markets supply/demand? or Stock/flow? How many tonnes of Silver has China, Russia etc. bought as reserves as compared to their Gold purchases? Do these Sovereign metric tonne purchases outweigh Joe Six-pack’s puny coin purchases? Steve, do you feel you are cherry-picking data to support Silver?

    • Goldrules,

      You bring up a valid point. However, if we look at sales of Gold and Silver Eagles sales, they do reflect overall investment demand. When Gold & Silver Eagle sales increase or decline, so does overall investment demand.

      Goldrules, you make a very bad assumption thinking that Joe-six-pack is the only one buying coin purchases. Actually, Hedge Funds, Institutions and the Wealthy are the largest percentage buyers of Gold & Silver Eagles…. likely 50-60%.

      No, I am not cherry-picking data. During the huge retail silver shortage last year, the majority of precious metal purchases were silver. And the majority came from the wealthy. You need to stop thinking that coins are being bought by little Grandmas.

      Lastly, I believe Central Banks such as Russia and China have a lot less silver reserves than people realize.

      steve

      • Steve,

        It is extremely unlikely that hedge funds or institutions are buying eagles. It is just too big of an inventory control problem. Anything less than 100 oz. would be an accounting nightmare.

        SteveW

    • Goldrules,

      I think it is obvious that Sovereigns are not buying eagles, silver or gold, but they are buying 1000 ounce dores, This is also probably true for JPMs purchases. No reason to pay the premiums or additional costs for minting. It is the people that are buying all of those eagles.

      SteveW

      • SteveW,

        Again, the majority of Gold & Silver Eagle buying is not by small Mom & Pop buyers. Oh no, the majority are Hedge Funds and the Wealthy. So, try to readjust your thinking on the Gold & Silver Eagle buying market.

        steve

        • Steve,

          I believe the wealthy are the main buyers of eagles but don’t buy that hedge funds and institutions would deal with the associated problems.

          SteveW

          • And increased costs of premiums when their mandate is to hold physical.

            SteveW

          • SteveW,

            Okay, you are free to believe what you want. However, I speak to some of the large dealers and they tell me quite the opposite. Furthermore, there are INCENTIVES for buying Gold and Silver Eagles. If they are bought in the United States, they do not have to be reported. Most other large bullion must be reported to the Govt.

            steve

  3. Steve,

    OK, Reporting is certainly a good reason for the additional costs and risks.

    Sorry should have known better.

    steveW

  4. Thanks for your responses Steve,
    I still wonder:
    Do Eagle coin sales have anything to do with the price? – I mean just because they are a lot of Eagle sales should we expect the price to rise? Is there chart data co-relating that? I certainly don’t feel the price relates to supply/demand over Eagle coin sales.
    My point about Sovereigns is that is their some relationship between Eagle coin sakes and metric tonnes purchases by Sovereigns? and which would outweigh the other? So, re-phrasing my question:
    Do these Sovereign metric tonne purchases outweigh coin purchases?
    I believe their is a good reason that “Central Banks such as Russia and China have a lot less silver reserves than people realize.” Same reason they have a lot less Oil, OJ, copper, wheat, iron ore…. etc. because these are consumed – Gold is not.
    Steve, you say “During the huge retail silver shortage last year, the majority of precious metal purchases were silver. And the majority came from the wealthy.”
    I can’t refute that, although I don’t know data to support it – but I wonder who are ‘the wealthy’? Millionaires? Billionaires? And since they are, supposedly, buying silver – will that cause the price to rise? (back to my first question)
    Do Eagle coin sales or Silver metal sales at all have anything to do with the price? I think the data on that might be somewhat… contradictory… perhaps even alarming ?
    Regards,

  5. steve, I’d like to know if you know a approximate ratio of say retail silver ounces sold ( by dealers ) to retail customers compared to purchases from retail customers. Say 5 (sold) to 1 ( purchased), It would give a indication as to silver being in strong hands or not. I have no plans to capitulate and sell but, it may provide some insight on market sentiment. Thank you,

  6. Joe Lindell | March 29, 2016 at 8:22 pm |

    Whatever this all means, it has no affect on the silver price. We are closing out the
    1st quarter of 2016 and the gold/silver ratio has broadened. The only thing affecting
    the price of silver and gold is the dollar falling. That said, all this forecasting of silver
    rising in 2016 is nothing but hearsay. There is nothing on the horizon to refute my
    statement unless the market drops by some high percentage. Despite the doom and
    gloom predictions the market will rise in 2016. The whole world is buying into he USA
    markets because it is the safe haven and their own markets are failing.

    • Joe,

      This a very slow motion tsunami. Not knowing the precise timing does not mean we don’t know that it is coming.

      The crash will look somewhat like this;

      Money is moving to the US from Japan, China, Eurozone and developing countries, dollar gets stronger. PMs drop for the last time.

      Credit Agencies downgrade Japan’s sovereign debt and, as a consequence all of the banks in Japan get downgraded. This puts them in default of their credit swaps and derivatives. The are forced to start selling assets. They can only sell good ones, no ones will buy their negative interest instruments. But because all 6 are forced to sell, prices start dropping and soon there are no buyers.

      This is the trigger that starts the world financial collapse. The contagion moves to Europe and soon the Eurozone has the same problem. Deutshes Bank is now in default on it’s collateral for all of it’s massive credit swaps and derivatives ($75 trillion) and no buyers for its assets.

      This cascading collapse then spreads to the US. Metals go to the moon and the dollar goes down the toilet. Your credit cards stop working. Banks close their doors (Greece or Cyprus) If you don’t have cash forget about buying gas or groceries. The governments take your money in “bail-ins”. In a week, all store shelves are bare. Government declares marshal law. Chaos, rioting and starvation particularly in the developing countries.

      After all of the death and dying, in rural community environments life will go on and the only money will be gold and silver, maybe ammo and hoarded food stuffs. We will all have to learn a new way of life for the next 5-10 years. If there is any real semblance of country or world government they will be forced to devise a currency that the remaining people of the world will accept. Undoubtedly one based on silver, gold and maybe copper. Markets will start locally, grow to regional and eventually nationally of internationally. The biggest problem that makes this crash different than all the others is two things; 1. It is global, 2. The supply of fossil fuels will be severely compromised and may never recover.

      Silver (and gold) is an insurance policy (that doesn’t expire in a year) against the inevitable crash of the dollar and the resulting consequences. The dollar was real money until the politicians, in pursuit of power and greed, created the FED and uncoupled the dollar from gold and silver and a complaisant or stupid constituency allowed it. This is the inevitable result.

      There is no way at this point to stop it. The only thing left is to prepare.

      Keep on stacking.

      Buy for cash and stash.

      SteveW

      • silverfreaky | March 29, 2016 at 11:07 pm |

        You forget something.The chinese and the russian.The chinese are the holder of the american debts.

        When the markets break down we will know how much gold china has.This will happen at earlier times.

        This money system only works with the chinese.Without them no change.The chinese
        will throw all the us-debts to the market.Game over!

        So in total, all countries try everything to hold this fiat money system.I think all centralbanks are working together.They will do everything to defend this system.
        China is the unknown parameter!

      • Hey SteveW,

        That sounds grim. Almost like The Road. I hope you are wrong.
        How about another scenario?
        The system, it appears, has a hole card.
        No question there is excessive debt that will be written down.
        But looking historically…
        No derivatives back in 1933 – but that had a minor solution to the monetary ailment if they hadn’t boxed it in. We just need to act on it in a significantly bigger way. Do you know what that was?
        The price of Gold was raised about 70+% – the limiting of its ownership was not the solution – nor its standardizing price fix – the revaluation was.
        Gold again can be revalued and it wouldn’t have to do anything at all. It can just sit there and be the world’s best wealth reserve. But, of course, the dollars that orbit it will have a significantly modified relationship with AU.
        Stay with me for a moment.
        Not that the COMEX is any guide but in the past few years the ratio of paper gold to physical gold has gone from 123:1, 326:1 to now over 500:1 (citing ZH). It’s exaggerative ratio might give us an indication of what paper gold is actually worth. Maybe not…
        Firstly, who owns all the world’s gold? Plenty of people have jewelry, a handful of us have some coins and bars, countries have tonnes in reserve, elites (Rothschilds etc.) own plenty, CBs… hmmmm.
        If we use an arbitrary number – let’s say $100,000. What would happen if Gold was worth $100,000/oz tomorrow. Answer: not as much as you think. People would drive to work, Dentists would drill teeth (probably no gold fillings though), Your wife would still watch Dancing with the Stars at night…
        Since physical gold is not a commodity – it, essentially, has no links to the marketplace. You can’t build cities with it – it’s too soft and expensive. So it’s price truly is arbitrary (it CAN be anything).
        But a revaluation would put ‘money’ into the public’s hands (those who sell baubles, rings, watches, coins, yes – gold fillings etc.) WITHOUT printing currency. A miracle. – money circulating again in the economy – its velocity rising. It would work – at the accurate valuation price.
        Debt could, at least, be partially managed (OK, not the derivatives mess – but that all seems to be in-house – “Hey, where’s that quadrillion you owe me?” – “Ummm… I’ll pay you next week.”)
        But would they need a Bretton Woods # to announce this ‘revaluation’? Probably, but first the paper gold market would need to collapse…. until – drum roll – you can’t buy physical gold any more. is that $750/oz? $300? Who knows – physical flow (large entities first) would cease and that is what would trigger the revaluation process trickling down to your local coin shop. Maybe a black market evolves to buy jewelry etc. for a couple of months in the transition.
        And you know what? – nobody will care that much. And few will even know about a revaluation but they will, eventually, find out Grandma’s brooch is worth $30,000 and it’s sold to pay the mortgage or take a trip to the Bahamas.
        Yes, the general populace is oblivious. That won’t change. They’re not going to ‘wake-up’ and start buying Silver. Things won’t change with the financial crowd either – non-yielding, heavy, too bulky to store… nahhhh
        International commerce can continue… in honorable gold – not unsafe paper dollars. The masses will still use fiat – perhaps a different form but paper money is not going away.
        Governments don’t lose out – they will tax or Nationalize mines (all gold in the ground belongs to the State, type-thing)
        Just don’t expect Silver to go along for the ride this time – it’s too important as a commodity – used in everything now for its conductor, reflector and anti-septic qualities – it can’t go up drastically without the marketplace losing equilibrium. So it won’t. It’s commodity value will restrain it. Sorry Rocco (he says while donning fire-retardant suit).
        So, you can expect this one little thing to happen OR a bunch of big dominoes falling amid massive losses with clueless central planners twiddling their thumbs. I don’t even think it takes imagination to envision a massive revaluation. If you can see the possibility of The Road – you can see the revaluation that, essentially, saves the system. Despite the general Goldbug consensus – CBs aren’t stupid – everything you know – they already know. They will do everything it takes and when that doesn’t work – they’ll do what does…
        Save in gold and live your life – fear-mongering only elevates stress. Those with physical gold can ride this, hopefully mild, storm (not tsunami) in terrific shape… easy-sneezy-Japanesy.

        • Goldrules,

          I wish you were right. The problem is that when the credit market implodes there is just not enough physical currencies in existence. Fiat currencies existence is wholly dependent on the trust of it’s users that it is worth something and will be worth something in the future.

          Look what happened when the Ruble was recently devalued. Russians rushed out to spend their Rubles on hard assets before the Ruble went down further. The price of the most desirable hard assets, gold and silver, went up. The Russian central bank jumped in using their sovereign wealth, mostly in US Dollars to prop up the Ruble. They have also been using their sovereign wealth fund to buy massive amounts of gold.

          Individual countries can experience crashes in their currencies without total devastation because they exist within the framework of a global network.. Think Zimbabwe, Brazil, Argentina. But that is the very root of the problem we will face. When the credit crises goes global there will be no network to support it.

          The US FED and the Chinese are in a very high stakes poker game right now. The FED has backed itself in to being between a rock and a hard place. They have no ammunition to apply to the problem. They feel the need desperately to normalize interest rates but the Chinese with their trillions upon trillions of bad dept would be devastated. They threaten to devalue the Yuan (Renminbi) by 20% which by itself could trigger a global credit crises.

          The Kabal of Keynesian Krazies that have been running central banks for the last 100+ years, financing world wars and profligate power hungry politicians, are about to get their comeuppance. Negative interest rates. Really?

          There are too many variables, 7.4 billion and counting, to predict with any accuracy the timing of the coming collapse but it is coming.

          We will be extremely lucky if when it comes someone, North Korea, Iran, Russia, India or Pakistan, doesn’t start a war.

          The only thing left is to get prepared.

          SteveW

      • SteveW: Of course you are right. I know this will occur. What I inefficiently tried to convey
        was the timeline, Many predicted 2016 by the end of the first quarter. Losers like Schiff,
        Morgan, Butler and their like have been predicting a rise in silver since 2011. These people
        are SELLERS for large companies. When people understand what you’ve written demand
        will occur and that is what makes silver go up in value. As of today it is a commodity not
        money.

        • Joe, You are absolutely right. Silver is still a commodity in the markets eyes and thank God for that. It allows us to keep buying more very cheaply.

          I don’t think the majority of the “people” will ever understand what is happening but I am sure of how they will react. When the SHTF they will fall back on what history has shown to be the true standards of value – gold and silver.

          Keep on stacking.

          SteveW

          • Hi SteveW,

            You said: “The problem is that when the credit market implodes there is just not enough physical currencies in existence.”

            Of course there is… at the right price.

            Yes, fiat currencies come and go – but they won’t be disappearing anytime soon. You are right – so the USD gets a 5:1 devaluation… life goes on – it’ll get hard for some.

            But, I’m not talking about an HI-related increase in PMs. I’m talking about a one-time revaluation of Gold – and gold alone. The complete demonetization of gold.

            Since the paper gold scheme (fractionally reserved) existence is fueling the current Deflation. Ex. that there can be no deflation UNLESS there is a Gold Standard… ie. In a Deflation (ex. The Great Depression) the price of gold wants to go higher but the CBs have it in a fixed rate box. It’s this that causes the deflation. The value of money goes up because the price of gold can’t – and they usually confiscate to remove any natural value increase – they, essentially, freeze it. It is held down now by the absurd paperization of gold.

            We are living in Deflation now (Oil, Gold, Silver, Iron ore, steel, copper, you could even say wages etc.) because the paper gold market is stifling the real price of gold.

            How many periods of deflation have we had since 1971? You can’t find any till now.

            Currency has been pretending to be gold ie store of value. However, gold has a 5000 year record as a store of value. The Central banks would like to think that their manipulation can confuse these roles. But it remains obvious. Follow what they do… not what they say… I suggest saving your excess in Gold…. not Silver, not baseball cards, not Cabbage Patch dolls.

            Deflation when on a gold standard comes about because bankers fix the price of gold at a certain artificial rate – say $35 an ounce. This means, in a proper classical gold standard, that the $35 is really acting as a warehouse receipt for an ounce of gold. What’s really happening is that the real price of physical gold wants to go higher and the value of currency goes up because the price of gold can’t.

            This is where we are but not because of an imposed standard – because of the gold derivative system that lends and fractionizes gold.

            For the currency-hybrid to be maintained with the least stresses – it can’t compete with Gold. So gold can’t rise slowly. This means a loss of confidence and a rapid hyperinflation ending at zero buying power. It must be done in one giant move to protect the currencies. This is what will happen. Yes, HI would be devastating – no one wants that. Trouble is the system is at its most fragile. The options are limited and Central planners are being painted into a corner. They know this and will try every trick in the book…

            Because the system fixed the rate for gold – 1933-72 – you get deflation in a hard currency because you can’t have a loss of confidence in gold if it continues to sit in a vault. The deflation means the people have to buy necessities and pay their bills instead of taking delivery of their gold because they, relatively, earn less and less the deeper the deflation goes although they can still buy things at a lower price but they can’t buy gold because the $20 bill they have buys too many other things they need to survive and the $20 bill takes progressively more labor to earn. As the value of the $ increases – everything it denominates decreases (in $ terms.)

            In a totally demonetized system you don’t get this dynamic. If you have mismanagement then the system is threatened by a loss in confidence. Because in a debt based system that still has monetary links to Gold (the centre of the monetary universe) it easy for bubbles to cause a crash but this erodes confidence. The answer is to to inflate the debts away and cure the overhang. Of course, there is trouble creating enough inflation, without eroding confidence to dangerous levels – as I said – this is where we are and the system is extremely fragile at present.

            The secret is take Gold OUT of the system. Make it what it already is – the best wealth reserve of all time. Think of it as fine art (Renoir) or premium real estate. You can’t fix anything by simply manipulating Interest rates – that only, temporarily, stems the tide – it is no solution. Now they can’t raise or lower – stock between Scylla and Charibdes.

            CBs don’t need to fear monger deflation anymore – it’s here – they either need to print massive currency (QE100) or stop supporting the paper gold market – let is fail and physical gold will trade freely at its true value – no more lending of gold – no fractional reserves of gold.

            If asset markets completely fail – we are in trouble – many will lose – but this solution is still viable. If currencies fail – we are in trouble. The CBs want inflation but there is only one way to get it now without the disaster of HI. Remove fractional paper gold from the monetary system and let the physical reach its intrinsic value as a wealth reserve – $50,000? $100,000? It cures two major problems – flooding the system with wealth WITHOUT printing a single $ of currency – and halt, or reverse, deflation. But it can only happen with a huge revaluation. It may sound implausible but it remains the best solution avoiding the catastrophe of a ‘The Road’ collapse.

            So it will happen because it has to happen… no matter how absurd it sounds to you – it is all quite natural. Humans may be complex and our system reflects that – but our solutions are quite simple… if you can envision them. Trick is envisioning them… very few on this mudball anticipated the repercussions of the collapses of 1929 (Stock brokers jumping out of windows) through to the latest of 2008 (6 millions people lose their homes).

  7. If the dollar crashes, what happens to say $5,000.00 Credit Card debit I have?
    Seems like I would be on the good side with no way to repay it.

  8. Watching our fiat monetary system we can learn how the saying “Give ’em enough rope and they will hang themselves” Just not using rope, fiat instead, with no gold to back their “Play” games over for those left with only bags of fiat and FRN. To the victor go the spoils, and IMHO the countries with the most “real money” (Gold and Silver) will be victorious, no matter how many bombs the losers drop. ” When fiat dies and China comes calling”, you make the deal sonny.

  9. MillenniumWright | March 30, 2016 at 12:54 am |

    Steve,
    I Iwould be happy to edit your copy for free, because I believe your analysis has integrity even when I disagree with you, and that a greater readership could be affected by better presentation. You keep posting reader-corrected articles, and one good edit would alleviate thst altogether. If more people made better decisions, our society would be far less vulnerable to the catastrophes looming on our horizon.

    Silver is the gentleman’s money, America was for a moment the gentleman’s nation. Small wonder the metal is enjoying a last, deep breath of demand,

    Michael

  10. YVON SHERIDAN | March 30, 2016 at 2:16 am |

    You Guys

    Keep on earning my profound admiration.

    In 1980 here in Montreal, I was recognized as a “Gold expert”, I have followed Gold &Silver ever since.

    In 1983, I wrote a 50 pages study on South African Gold mines.

    I have witched to Convertible bonds some 25 years ago but kept on following the precious metals.

    Please keep on the good work, what we need is statistics.

    Best regards,

    Yvon Sheridan

    MONTREAL

  11. Lol, silver obliterated below 15 for staters by the comex once mone time after NFP data : the song remains the same !
    By the way, some expect or rather hope that new shangai yuan gold fix will change anything.
    To succeed, it would require that some chinese officials would have somthing between legs : history prove they are only strong with the weak and weak with the strong.
    All the jim willie and this kind of clowns have no idea about what they are talking, brics are hafl century late despite all western debts and so called “unemployed”.
    Asians will bow again and again in front of western oligarchy who invented for the worst capitalism in its ultimate form.

  12. “…they are buying a lot more silver eagles than gold eagles since 2007.” The USMint started selling Gold Buffalos in 2006. You don’t mention this at all. It’s as if the Gold Buffalos don’t exist. What you should be doing here is comparing gold to silver sales at the USMint. You have in the past stated that your reason for leaving out the Gold Buffalos is that you haven’t included the America The Beautiful silver coins and so they both cancel each other out. Not exactly. Looking at the the 5 years from 2010 to 2014 The ATB silver coins come in at 5,199,000 ozs. compared to the Gold Buffalos 937,500 ozs. This is a ratio of about 5.5 to 1. Including these two coins would give us a more accurate idea of silver to gold preferences.

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