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04/26/2013
Silver versus Gold Inventory

There is about 150,000 tons of gold above ground, and at least 5x that amount in silver. But those totals are irrelevant. What is relevant is what you can purchase.

About half of the gold total is in jewelry and artwork. The amount that is recycled and re-enters the market as bullion and coins on an annual basis is negligible for the total gold supply for sale.

So the gold inventory is about 75,000 tons (gold and bullion) and it is rising at very small rate of about 2,000 tons per year.

Of this 75,000 tons, almost half is owned by central banks (about 33,000 tons). Most of this is not going to be for sale anytime soon.

That leaves about 42,000 tons. I would say that at least half of this total is in strong hands who are not going part with it anytime soon.

That leaves a gold market of about 20,000 tons.


Let's compare this with silver.

Let's start with 750,000 tons as a ballpark number of the amount of silver above ground. It would be over 1 billion tons, but the rest has been lost (most of it in the last 50 years in land fills).

Nearly all of that silver is in jewelry, silverware, film, automobiles, anything electronic, mirrors, windows, solar panels, etc.

The amount in coins or bullion is quite small:

ETFs: 500 million oz (maybe not!)

Bullion Banks: 50 million oz

Private Investors: 500 million oz.

Comex: 50 million oz

Governments: 50 million oz.

Dealers and Wholesalers: 50 million oz

Total: 1.2 Billion oz

Note: Many people estimate the total closer to 1 billion oz.


However, not all of this silver (bullion and coins) is for sale.

Let's remove the paper gold (ETFs): 500 million oz. Most of this not available for physical purchase.

Let's remove half of the silver owned by private investors, who are not selling: 250 million oz.

Let's remove the government total: 50 million oz.

So, let's subtract 800 million oz from 1.2 billion oz and we are left with 400 million oz supply.

If we convert 400 million oz to tons, we get (12,000 tons)

So, the global supply of available gold (bullion and coins) is about 20,000 tons, versus about 12,000 tons of silver. Thus, the physical silver availability (bullion and coins) is much smaller than gold. And when you use dollar amounts there is a huge difference.

Silver: 400 million oz at $24 = $10 billion

Gold: 20,000 tons at $1460 = $1 trillion (about $50 million per ton)

Thus, the silver supply (bullion and coins) is about 1/100 the size of gold from a dollar valuation perspective!!!

These are my personal estimates. But I think they are +/- 50% accurate. I also think that these totals are about to shrink as more investors with strong hands by up physical metal.

One last final comment, purchasing silver when the gold/silver ratio is 60/1 is an excellent entry point. It is likely to reach 30/1 and has a chance to reach 15/1 - if there are severe silver shortages.

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