Ooit heeft er iemand gevraagd om alle delen te posten...weet niet meer wie. Met een tussenpauze van vele weken post de auteur deel 3:
Part 3: The Real Silver Deficit
By David Zurbuchen
19 May 2006 at 12:47 PM EDT
“Silver is rarer than gold. Period. There is less silver in the world, above ground than there is gold. That is easy to document. Since I have been harping on this point, no one has been able to refute it.”
“Even though there are five ounces of gold in the world now for every one ounce of silver, this 5 to 1 ratio will expand as newly mined gold is added to above ground supplies… This should get your juices flowing. It should drive you to buy silver… Silver is more rare than gold, and rarer still is someone who knows this fact. You should act accordingly.” - Ted Butler
MADISON, Wis. (SilverInScripture.com) -- I began my last essay, “The Silver Deficit,” quoting Mr. Butler in a positive light. I sought to prove him right, and I believe I did concerning the 60+ year structural supply/demand deficit. But I must now ask, where has Ted Butler so easily documented his claim that silver is more rare than gold? I don’t recall ever reading his proof text.*
*If one does happen to exist, I would appreciate someone sending it to me.
As far as I know, Ted Butler is dead wrong in all of his above pronouncements. It was comments like those above that mislead me into writing my first ever Gold-Eagle essay entitled “Silver: A Rare Opportunity”, an essay which emphasized the very ‘facts’ that I’m now attempting to refute.
Now, I realize I’ll probably be making some enemies by saying Ted Butler in wrong, but I believe this is an important issue to come to terms with. If our investment decisions are founded upon fictions, then we are prone to failure. That being said, I do truly enjoy Ted’s writings, after all, he was one of the few writers who really piqued my interest in silver over the years. But nevertheless, I don’t want the average person to be misled by the above claims he has frequently made.
So here are my opposing claims:
Silver is not rarer than gold.
The gold to silver rarity ratio is about 1 to 5, not 5 to 1.
Finally, there is nothing factual about the statement that silver is rarer than gold, UNLESS you qualify it with the condition that you are only referring to market accessible silver in the form of bullion. But this is an unfair comparison, because you are including all gold in jewelry form while excluding all silver in jewelry, sterlingware and privately held bullion/coin forms. Granted, the market price of silver will need to rise a greater percentage than the market price of gold before either its jewelry, silverware or privately hoarded coin forms become available to the market in large quantities, but the fact still remains that this form of silver is available at some price.*
*We’ll deal more with this ‘price’ in an upcoming essay. For now one would be advised to read “Hidden Silver About to Surface?” But a word of caution, at this time I believe Gene Arensberg’s estimate of how much silver is held in private hoards, if only dealing with silver in coin and bullion form, is too high.
Let us begin by reading a very telling quote from pg. 1046 of the 1954 Minerals Yearbook:
“According to the Bureau of the Mint, the world output of silver from 1493 through 1954 was 20,039,463,100 troy ounces, valued at $17,278,499,800. Of this total yield, North America produced 62 percent and South America 20 percent. Mexico contributed 35 percent of the total, the United States 21, Bolivia 9, Peru 9 and Canada 4. It has been estimated that about one-third of the total world production of silver is in circulation as coinage or held by governments for monetary purposes; one-third, including that hoarded, is privately owned; and one-third has been misplaced or dissipated.
Since silver mine production from 3000BC to-1492AD was equal to about 7.6B ounces (Part 1), we must add to this the 20.0B ounces mined from 1492-1954 to arrive at a total of 27.6B ounces of worldwide silver production from 3000BC to 1954AD.
If only two-thirds of those 27.6B ounces remained, then in 1954 there were roughly 18.4B ounces of silver in existence, mostly in the form of coinage, government bullion, private bullion, jewelry and silverware/sterlingware.
From the following information we can begin to determine the world’s silver supply/demand deficit for the period 1955-2005:
Worldwide mine production from 1955-2005 was about 19.5B ounces.
Free-World industrial demand (I.D.) from 1955-2005 was 19.4B ounces.
I.D. from transitional economies from 1955-2005 is estimated at 3.7B ounces.*
*Transitional Economies supplied roughly 16% of the mine supply during this period, so I will also assume that they contributed 16% of the overall industrial demand.
I.D from ‘other countries’ from 1977-2005 is estimated at 0.378B ounces.*
*Assumes that of the total industrial and arts demand of 630.2M ounces, 60% was used in industrial applications. Data for the period 1955-1976 is missing, but this is relatively insignificant.
From the above, we discover that the aggregate world demand for the period 1955-2005 was 23.48B ounces.*
*19.4B + 3.7B + .378B = 23.48B ounces
If we subtract this number from the cumulative mine supply during this same period (19.5B ounces), we are left with a massive deficit of 3.98B ounces.*
*Interestingly enough, in 1941 the total world monetary stocks of silver were about 4.5B ounces (see: Minerals Yearbook 1941 pp. 55-56). When considering that the above deficit of 3.98B ounces does not account for the period of 1942-1954, it becomes crystal clear that there is very little cheap silver remaining.
But we have yet to factor in old scrap supply, which CPM Group, in their 2003 Silver Survey, defines as:
“Scrapped fabricated objects, old coins, old jewelry, decorative objects, household objects, a host of industrial waste, spent ethylene oxide catalysts, old electronic scrap, old sterlingware, old silverware and finally, photographic chemicals, films and papers [emphasis mine].”
Since the vast majority of old scrap supply has come from spent photographic materials (est. 80% in 2000) and catalysts (est. 10% in 2000) (click here), we will assume that 90% of the old scrap that comes to market had its origin in industry as opposed to the arts (i.e. jewelry, sterlingware, decorative objects, etc.). We will then subtract this additional supply from the deficit to arrive at an accurate estimate of how much silver remains.
Estimated* scrap supply from 1955-2005 was 5.45B ounces
*Due to a deficiency of old scrap supply data for the years 1955-1959, some approximations had to be made based upon known ratios of industrial demand vs. old scrap supply in the neighboring years.
Since we are assuming that 90% of the old scrap came from industrial sources we have:
(-3.98B ounce deficit) + (5.45B ounce scrap supply x 0.90) = 1.47B ounce surplus for the period 1955-2005.
One other factor to consider is a loss of silver content in coinage due to abrasion. For the years 1955-2005, coinage demand was 2.73B ounces. Since the vast majority of this demand was realized between 1955 and 1970 (1.83B ounces worth), I will assume that the loss due to abrasion was 15% of the total in the ensuing 35 years.
1.83B x 0.15 = 0.27B ounces lost to abrasion of the coinage.
I’m confident this estimate is conservative fo