Saturday, October 1, 2011
Silver more valuable than gold
Silver is in a severe short supply compared to gold. In 1950 the above ground silver available was 10 billion ounces. In 1980 that was reduced to 3.5 million ounces and last year, in 2010, it was a paltry 500 to 700 million ounces. Conversely Gold, in 1950 was one billion ounces and in 2010 increased to a massive seven billion ounces. So while the availability of gold has increased 600 percent, silver availability has plummeted by up to 91 percent over the same period. At the same time the industrial demand for silver has shot up by 18 percent.
In fact, from 1990 to 2000 almost 2 billion ounces of silver were gobbled up in industrial demand. Most of this was from government stock piling as mining has never been able to keep up with demand. Now the stocks have been reduced to nothing according to latest government reports. In 2009 production was only 710 million ounces, yet demand topped 889 million ounces, leaving a shortfall of 189 million ounces.
On top of this, China, for example, grows its solar energy manufacturing by 100 percent per year. This means that by 2013 the world will need 130 million ounces of silver just for one year of global solar demand. A demand it currently cannot service.
So this might explain why in the last week of September the US mint decided to temporarily suspend silver coin sales. They are not selling a majority of the collector-silver coins including:
U.S. Mint Silver Proof set for 2010 and 2011
2011 Gettysburg National Military Park America the Beautiful
Five Ounce Silver Uncirculated Coin
2010 Mount Hood National Forest America the Beautiful Fiver
Ounce Silver Uncirculated Coin
2011 America Eagle Silver Proof coin
2010 and 2011 America the Beautiful Silver Proof Set
It has been said that this is in response to silver prices dipping but it makes more sense that silver is becoming harder to source.
In addition, although the price of gold has also plummeted, there has been no changes or sales with other U.S. Mint products, such as American Gold Eagles for example. In total, the U.S. Mint has listed eight of their product packages as "unavailable." And it is uncertain at this stage when they will re-list them.
So what does all this mean? It means that in the coming months and years silver will become more valuable than gold. The price cannot be 'held' down forever. Especially when China opens its gold exchange next June and floods the precious metals market with 230 million more investors and speculators.
So silver is more valuable than gold and now is probably the very best time to buy silver.