The Collapse Of U.S. Silver Stocks As Public Debt Skyrockets

The U.S. Empire is in real trouble.  This is due to its idiotic business model of selling quality assets while acquiring massive liabilities and debts.  Of course, the U.S. Government realizes this is not a sustainable way to do business,  but at least for now…. we continue to have our Bread & Circuses, McDonalds & NFL Football for a bit longer.

Furthermore, Americans have no clue that the U.S. Dollar’s world reserve currency status continues to disintegrate each passing day as more countries elect to by-pass the Dollar and trade in other currencies… especially the Chinese Yuan.

The Total Liquidation of U.S. Silver Stocks

One such asset the U.S. Government totally liquidated is its massive stocks of silver.  In 1940, the U.S. Treasury held 3,135,000,000 oz of silver.  That’s correct, 3.1 billion ounces.  That is nearly four times the current annual world mine supply of 820 million oz.

This figure is documented on page 64 in the USGS 1940 Gold-Silver Minerals Yearbook:

United States Monetary Stocks

 You will also notice that the U.S. held nearly $22 billion of the total $30.5 billion in world gold reserves.  This was an amazing 72% (approximately 20,000 metric tons) of total world gold reserves.

Currently, the United States supposedly has 8,000 metric tons of gold in reserve.  Unfortunately, we have no way of knowing how much gold is really there and if so, how many claims are on each ounce.  Some analysts such as Harvey Organ, believe the U.S. gold vaults are totally empty.

While it’s nearly impossible to know how much public gold remains in the vaults of the U.S. Government, we have a pretty good idea of its silver inventories.

This next chart shows the massive decline in U.S. silver stocks from 1940 to present.  As you can see, silver stocks at the U.S. Treasury declined from 3.1 billion ounces in 1940 to 7 million ounces currently.  This is a staggering 99.99% decline.

Total U.S. Silver stocks vs Public Debt

Now, if we look at the Red line on the chart, we can see the huge increase in U.S. debt.  According to the TreasryDirect.gov August release, the U.S. debt increased to $17.7 trillion.  Compare that to the paltry $43 billion of U.S. debt in 1940.

Interestingly, if we took the $43 billion (1940 U.S. debt) and divided it by 17.7 trillion (present U.S. debt), it would equal 0.24% or a stunning -99.76% difference.  Thus we have the following:

Change from 1940 to 2014

U.S. Silver Stocks = -99.99%

U.S. Debt Ratio = 00.24% or -99.76%

Looking at in a different way, the U.S. Treasury had $14 of debt on its balance sheet for each ounce of its silver holdings in 1940, compared to $2.5 million of debt per ounce of silver currently.  We can only guess if the U.S. Treasury holds the 7 million ounces it shows on its books as it hasn’t updated that figure since 2000. (figures from About.Ag)

U.S. Silver Production Falls More Than 50% Since 1940

Not only did silver stocks at the U.S. Treasury decline substantially over the past 70+ years, so did its domestic mine supply.  The United States was one of the largest silver producers in the world in 1940.

U.S. Silver Production 1940 vs 2013

In global silver mine supply, the U.S. ranked second in the world by producing 69.5 million ounces of silver in 1940, while Mexico came in first at 82.6 million oz.  Those were the good ole days when the United States manufactured and consumed the majority of its own goods.

Today, we see a much different story.  The United States is no longer a major producer of silver.  In 2013, Mexico remained the number one silver producer in the world at 170 million oz, while the U.S. fell to the ninth spot at 33.7 million oz.  While Mexico more than doubled its silver production from 1940 to 2013, the U.S. did the opposite, suffering a 51% decline.

Why should the United States produce silver when Mexico and South American countries can do the hard work while the U.S. Federal Reserve can print all the Dollars it needs?  Come on, this is no-brainer.

The Dow Jones-Silver Ratio

As the Fed and U.S. Treasury work hand in hand to prop up the Stock and Bond markets, the paper prices of gold and silver are manipulated lower.  This can be seen by the change in the Dow Jones to silver ratio from 1940 to present.

The Dow Jones Silver Ratio 1940 & 2014

According to historical data taken from Stockcharts.com, I estimated the Dow Jones averaged 140 in 1940, while the market price of silver was $0.35 an ounce (Kitco.com).  Thus, the Dow Jones-Silver Ratio was 400/1, compared to the lofty 912/1 presently.

If we apply the same Dow Jones-Silver Ratio of 400/1 in 1940 to the price of silver today, it would equal $42.43.  Of course, the current price of silver is $18.61 due to the Fed and member banks siphoning its monetary liquidity into the Grand U.S. Dollar-Bond-Stock Market Ponzi scheme and away from real assets such as gold and silver.

You see, this is a strange irony, because this wasn’t always the case.  If you look at the table above you will see the U.S. Govt. silver price of $0.71 in 1940.  Even though the world market price of silver was $0.35, the U.S. Congress approved on July 6th, 1939 the purchase of domestic silver mine supply at $0.71 an ounce.

Prices of Gold & Silver 1940

So, back in 1940 when gold and silver were money, the U.S. Govt stepped in and INCREASED their value to maintain the monetary system.  Here we can see, that Congress gave approval for the U.S. Treasury to purchase silver from its domestic mine supply at twice the market rate ($0.35 to $0.71).

What a difference today aye?  First of all, Congress (except for a few like Ron Paul) today has no clue what money is.  Secondly, the Fed and member banks are SUPPRESSING the price of gold and silver to maintain the last vestiges of the sinking U.S.S. Dollar

Matter-a-fact, two-thirds of the primary silver miners in my group stated losses during Q2 2014.  Again, who gives a RAT’s AZZ about the silver miners when you have the world’s largest printing press?

Getting back to the Dow Jones-Silver Ratio, if we took the U.S. Govt controlled price of silver in 1940 at $0.71, the Dow Jones-Silver Ratio would be 197/1.  Taking that ratio and applying it to the current price of silver, it would equal $86.15 today.  Which means, if the world was a better place and we had the Fed and Treasury on the side of REAL MONEY, the price of silver would be closer to the crazy $100 figure that most of the Silver Bears state as “INSANE.”

Unfortunately, this isn’t the case as the U.S. Government liquidated 99.99% of its silver inventories and the majority of its gold reserves.  In return for pawning off the greatest hoard of Gold & Silver on the planet, the Fed now holds $4.4 trillion of worthless crap on its balance sheet, $2.4 trillion in U.S. Treasuries Miseries and $1.7 trillion in MBS Mortgaged Lacking Securities.  (figures from federalreserve.gov August 2014 Report)

Then of course we have the $17.7 trillion in the “Official” stated debt of the United States.  This doesn’t include all the social welfare programs and all the off-balance sheet garbage.

I am simply amazed at the lack of character and insight of the walking dead analysts on Wall Street.  This is also holds true for the BOZO’s who think they are providing a service by commenting on precious metal blogs about the merits of owning U.S. Dollars and highly inflated stocks-bonds.

While it’s true that the gold and silver market have taken a lot of punishment over the past several years, there’s a good reason China, India and Russia continue to add to their gold hoards.

The day will come when an AVALANCHE of countries exiting the Dollar will finally destroy its value.  Unfortunately, the majority of Americans holding onto paper assets will be the last to know when this occurs, while precious metal investors saw it coming….. much later than they anticipated.

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38 Comments on "The Collapse Of U.S. Silver Stocks As Public Debt Skyrockets"

  1. “This is also true for the BOZO’s who think they are providing a service by commenting on precious metal blogs about the merits of owning U.S. Dollars and highly inflated stocks-bonds.”

    This is so sweet of you to mention me–thanks! Remember, though, I am not long stocks at this point and bonds with any duration are just stupid.

    A dollar bull though? Yes, for now. That would be me. Until Japan or some other country completely blows up first–they are further down the rabbit hole–i Will be a DOLLAR bull.

    And how your silver thesis been playing out? Bozos are everywhere I guess. LOL

    Jack

    Thanks for the honorable mention!

    • currently silver is buried under dollar-denominated paper derivatives at a ratio of 100::1. When/as the dollar dies, that paper will burn away and the price/value of physical will go asymptotic. Right now it’s a steal at $18/oz., and I only wish I had more dead presidents to convert

      @NSA: this remark refers to Presidents already dead, i.e. those pictured on the $1, $5, $20, and $100 bills

      • Well, if you – as an ordinary american citizen – has to write that you did not mean that you wished all presidents dead, then perhaps it is time that you americans woke the FUCK UP!
        Can’t you see that there is a MAJOR problem with your country (not just those renegade NSA)?
        Are you seriosly so blinded by your so-called elected leaders, that you have left behind the glory of The Patriots, which gave us (the rest of the world), a shining example of hard work and freedom, through blood, sweat and tears?!
        I cry every time i hear Ron Paul (yes, i am referring to one of the last true Patriots of the US), trying to reach out and explain to the people that things in government are not as they seem.
        Because no matter how hard he tries, there are 5-10 senators ready to laugh and turn you all against the true Patriots of the United States of America.
        Wise Up!
        You will probably be a bit angry at me right now, but i truly wish for the greatest revolution in human history, The American Revolution, to be what it was meant to be:
        The fight for Liberty, Freedom & Free Choice.
        Instead of Surveillance, un-ending captivity (Patriot Act) & Fear.
        And we will follow, should you finally reveal the international globalists in your cabinet, administration and senate.
        – Frederik “The Dane”

  2. Hello Steve,

    Thank you very much to share with us your analysis. I certainly don’t have the patience to search and find all the data that you share here, totaly free. I realy enjoy reading your views, always insightful.

    Yannick

  3. Mr. Jack “ASSets” that commented earlier obviously doesnt understand the true reason for stacking physical silver for the future. Sure, make all the fiat you can now is smart but better convert to silver and gold ASAP!

  4. A reasonable facsimile of the author’s thesis applied back in 1998-99. Investing in gold/silver worked out really well then. The same counter arguments as the comment above were made.

    The Chinese sequester of $US as foreign currency reserves had just begun and postponed the abandonment of the $US for more than a decade. No one saw that at the time. Still, until ~2011 gold/silver was a fabulous investment and is still way above where it was back in 1999.

    Is there an analog to the China of 2000 out there now? Who will create another $3 trillion of $US foreign reserves? To paraphrase the cliche: if you’re playing in the foreign trough and you can’t identify the patsy, you’re it. Buy gold/silver while it’s down and easy to dismiss.

  5. One more vital piece of info: There has been another accumulator of $US: the Federal Reserve’s assets went from ~$800 billion in 2004 to $4.4 trillion in 2014 (http://research.stlouisfed.org/fred2/series/WALCL).

    Who saw that coming? It’s as if another China appeared essentially out of nowhere. Will that accumulation of an additional $US 6.2 trillion in reserves happen again?

    • Oh……sure, the BIG U.S.Treasury assault is underway. And no one in ever going to buy the debt again!

      Got it, let’s see how that old, tired thesis plays out,
      Jack

      (Oh, 200 trillion in derivatives exploding might send a couple of plebs into the Pavlov response of U.S. treasuries).

      • Jack,

        As Archie Bunker from ALL IN THE FAMILY would say to his wife Edith, YOU’RE A REAL PIP.”

        steve

      • It’s not a matter of usd alone anymore, the question is : will another competitive monetary and Financial system put in place by the brics in the coming years or not.

        If and when yes the western world will have some problems imo.

  6. RICHARD RALPH ROEHL | September 15, 2014 at 5:27 pm |

    Whom the gods would destroy, they first make mad.

  7. Only a fool [other than the Fed Reserve themselves] would buy U.S. debt [treasuries] at this point.

  8. nice presentation.

  9. Steve,

    Nice work. If all the Official Silver has gone, why would anyone assume that the same thing has NOT happened to Gold (The barbarous relic that generates no returns)? It seems to me to be a common sense assumption that the Gold is long gone?

    • philipat,

      Good point. Furthermore, that 3.1 billion ounces of U.S. Treasury silver holdings in 1940, didn’t include silver in circulation…LOL. Hell, I am trying to get a figure on that. I would imagine it has to be at least 1 billion ounces.

      steve

  10. First, thank you for sharing your work here. I was under the impression J.P. Morgan is holding what silver there is to be had. Is there anyway to force the Fed to disclose how much Gold and Silver the country has and where and the number of claims on each oz ?

    • HYMN,

      If the Fed did provide that DATA, I believe it would do in the U.S. DOLLAR. I don’t believe there is more than the 7 million oz of silver at the U.S. Treasury. Could be a tad more or less. As for gold, we will find out when the U.S. Dollar Phat Lady finally sings.

      steve

  11. “Why should the United States produce silver when Mexico and South American countries can do the hard work while the U.S. Federal Reserve can print all the Dollars it needs?”

    Because the owners are not the same ! Indeed, as not a member of the club I cannot borrow 1 billion without any collateral or even create this one billion out of thin air.

    That’s as simple…

  12. Tore Johansson | September 16, 2014 at 4:17 am |

    Can anybody explain that whay the cost of producing gold did follow the price of gold all the way up to now about $1300?

    • Tore,

      If I understand your question here is a partial answer. This century shallow, higher grade ore has largely been depleted, while the cost of labor, security, hardware, government regulations, fossil fuels and electricity have gone up a lot. Strikes have had an effect in some areas, and new exploration is down as gold isn’t allowed to reach a free market price.

    • Tore,

      It all has to do with the price of energy. In 2002, a barrel of Brent crude was $25, by 2011 it hit $111. This is more than a 4X increase in the price of energy. It’s not just the cost of energy that the mining companies use, but an increase in the price of energy IMPACTS ALL ASPECTS such as EQUIPMENT, SUPPLIES, LABOR, MATERIALS, EXPLORATION & ETC.

      Now that the price of oil has stayed around $109-$111 since 2011… costs have leveled off.

      steve

      • Sure the energy cost is part of the issue but can hardly be the hole answere. In that case ex iron mines should have about same cost explosion. I dont think they have.
        IMO big part is on the lowering grades the hole industry is suffering from. And all this drilling that gives tiny results.
        If it is in that way? Will it stop here or is the lowering grades to continue year over year?
        I think it will and in that case higher energy costs and lower grades will be a very poison cocktail for the PM industry.
        And in that enviroment pic the very right mining stocks could be very profitable.

        Sorry if the english is bad. Im a swede and not use to expresse me in Your launguage.

        • Tore,

          According to Brent Cook, one of the top Mining Geologist Analysts in the precious metal industry, stated that EXPLORATON COSTS INCREASED 10 TIMES since 2000. This is due to energy for the most part. Energy is the key as well as falling ore grades. I agree.

          steve

  13. Looking at your chart Total Silver Stocks Vs Debt, I notice the initial BIG drop in Silver Reserves took place in the 60″s. This is no doubt due to the PLANNED assination of JFK by the Banking Cartel and Lyndon Johnson.

    The Banking Cartel wanted to make sure there would never be enough SILVER again for the US to back it’s dollar. Lyndon Johnson took immediate action againsy Kennedy’s planned $10-$20 bill’s backed by SILVER implementation.

    • Ken,

      Part of the reason for the huge drawdown in U.S. Silver stocks during the 1960’s could be due to the Banking Cartel’s manipulation, but industrial demand was picking up substantially during that decade as well as annual silver coin mintages.

      For example, from 1950-1959, the U.S. Mint used 379 million oz of silver in minting coins. From 1960-1969 it increased to a staggering 1.1 billion. Figures from About.Ag.

      This is the reason, Lyndon Johnson signed the 1965 Coinage Act which removed silver from most coins after 1964. Basically, the U.S. could not continue minting silver coins as the number of annual mintages would have wiped out the remaining silver inventories by the early 1970’s.

      Of course, if the real value of silver was allowed to increase, then it would have remained as money.

      steve

  14. I’d hate to be a silver investor. When you watch them cap the price on up days and slam it on other days…..it must really make you want to throw up all over the place.

    Silver investors are never going to win the war. They can drag this out for decades. Like I said, you’ll make a lot more money on the short side.

    • Jack,

      Ironic how you KNOW FOR SURE this will go on for decades. Looks like you are falling victim to the very same thing you accuse the metal investors are doing. At first I thought you were LEGIT BEAR, but now I believe you may have an ulterior motive. If not, you are DELUDING yourself…LOL

      This will not go on for decades… GUARANTEED…LOL.

      By 2025, U.S. shale oil production will be stripper plays, and I would imagine total production will be below 4 mbd. In a few years JACK OLE BOY, you will have to WAKE UP AND SMELL the COFFEE.

      steve

      • Okay, I’ll concede your right. You’ve finally converted me. But one thing: a FEW years is a lifetime to look stupid. So I’ll concede you are right: I will start buying silver in the low teens in the next year or so….and hedge myself JUST IN CASE you are right that in a few years or a decade perhaps that this game can’t go on any longer.

        But think of all the suckers that have been “stacking” while massive amounts of fiat are being made…..which can be used to buy some “real money” down the road. Meanwhile, “the stackers” continue to sit it out in their bunkers while the world passes them by. So you’re right: it’ll go your way at some point. But how much life will you have given up by then?

        Jack

        • Oh……by the way, I was reading TF Metals report and read the Miles Franklin founders will to his children.

          He WAS SAYING all the SAME STUFF you have been saying…….20-30 years ago!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

          What I am saying, and have been saying to you for a long time, is that don’t discount the great plight of mankind. You just never really know HOW LONG they Kick THIS CAN!

          • Jack, think of gold/silver bullion as insurance, rather than an investment, and it will make more sense to you. Do you have home insurance? I have “wasted” money for nearly 35 years on home insurance, because I have never had a claim. Just think of all the fiat I could have made investing that money over 35 years.

            What are the odds of my house burning down in 2015? 1 in 200, 1 in 500, more? Pretty small odds, but I will still throw more money into that bottomless pit next year and the next and so on. What are the odds of the dollar’s purchasing power collapsing next year due to other countries abandoning its use? 1 in 5, 1 in 10, 1 in 20? Who knows? But it will happen, some day.

            IMO, if you believe in home insurance, stacking is a no brainer.

            I no longer worry about how far off the collapse is. If the it happens after I die, then my kids and grand kids will benefit, which is even better. I can’t lose.

  15. Silver Curious | September 16, 2014 at 11:44 am |

    Dow-to-Silver ratio 1940 to present – very interesting ……. also the Debt-to-Silver ratio very interesting.

  16. I was under the impression that all the gold reserves were turned over to the private bank known as the Federal Reserve and it’s primary dealers after the 1930’s bankruptcy of the country.

    I doubt that there is much in Fort Knox. I believe the primary dealers still have huge stashes of PMs tucked away somewhere.

    The people no longer own the gold. It was given to the banks. This is why we are all debt slaves to the almighty FRN.

  17. robert h siddell jr | September 17, 2014 at 6:18 am |

    MBS = Mortgaged Lacking Securities is good; I was translating it as Mortgaged Bogus Securities. About 1984, a mobile home dealer friend got busted for presenting bogus trailer numbers to a bank loan officer that trusted him. My friend went to jail, the loan officer got fired and the bank had to eat the losses. They were such stupid bunglers compared to the oh so smart and successful millionaire banksters of today…

    • Robert h siddell jr,

      MBS – Mortgaged Bogus Securities, EXCELLENT. Should have thought of that one. Yeah, the Bankers today don’t deal in anything less that $$Billions with fees in the $$Millions.

      steve

  18. Well, I know as a matter of fact that we’re closer to the bottom than to the top! Could we go lower from here? For sure. Much lower? Yes, but I doubt one would be able and find metal to buy in size, if any at all. So the question is: Will the old highs be re-visited and surpassed within the next 2-10 years, in all fiat currencies? I’m inclined to think this to be case, due to ever more fiat currency creation, and a dwindling supply, and increasing demand – our host’s work shows this without a doubt.

    Steve, thanks for a great blog and sharing all of your outstanding research. It’s much appreciated.

  19. Dear all,
    The only value any asset has, is the value the market thinks is worth…
    We all think normal to buy a coke more expensive in a hotel than in a grocery store.
    Silver has no value to investor for the moment as long as the USD will be strong.
    Regarding the global situation : Europe is agonizing, China has a 40 year old business model investing all its surplus in manufacturing and still a unique political regime, Japan will soon have a 50 year old average population. So yes, the US is and will be for some time, I think, the best bet.
    Investing your money in silver only if you are prepared to war or you think that the world will be soon in the middle age again…
    Good luck to all whom invested in this asset…

    • ChineseCash,

      Unfortunately, your theory that the “VALUE THE MARKET THINKS ITS WORTH” doesn’t hold ground anymore. Furthermore, there are dozens of examples where the MARKET GOT IT WRONG IN SPADES. Enron, WorldCom, Lehman Brothers & Bear Stearns are just a few examples of the MARKET valuing these stocks base on FALSE DATA.

      The entire market is based on FALSE DATA and MANIPULATION.

      Now, if you said that the MARKET IS WORTH THE WHAT THE FED & CENTRAL BANKS ARE PROPPING IT UP TO BE… then you would be making a correct statement.

      Lastly, you must factor the PEAK & DECLINE of global oil production and its impact on the majority of valuations of Stocks and Bonds. Paper assets will implode when the world realizes PEAK OIL is here.

      steve

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