by Steve St. Angelo, SRSRocco Report:
The debate on the amount of above-ground silver stocks is completely meaningless when we compare it to the value of global assets. It is also true when we compare the estimated above-ground stocks of gold versus silver. While there may be more silver held in the world than industry analysts have forecasted, it’s still a mere fraction compared to global assets.
Recently, Jan Nieuwenhuijs of Voima Gold, formerly known as “Koos Jansen” at Bullionstar, wrote an article titled, “How Much Silver Is Above Ground?” I had several followers email me this article and asked my opinion. So, I thought it best to put out my own commentary to set the record straight.
Jan stated the following in his article linked above about silver above-ground stocks:
Above-ground silver stocks are an order of magnitude higher than what is widely assumed.
In total, there were an estimated 1.6 million metric tonnes of physical silver above ground by late 2018. This amount is 20 times higher than what The Silver Institute discloses as “identifiable above-ground stocks,” which is what’s widely assumed to be the total above-ground stock. The huge discrepancy is important to analyze, as it reveals silver’s true stock to flow ratio and supply and demand dynamics. Misunderstanding these dynamics would mean failing to understand the price of silver.
So, if we go by what Jan is implying in his article, he believes the world contains 20 times, or 1.6 million metric tons more “identifiable above-ground silver stocks” than what is widely assumed. However, the 2019 World Silver Survey reported that the world held about 2.5 billion oz of silver (approx. 79,000 metric tons) as identifiable above-ground silver stocks. Most of this silver was held as “Bullion Stocks & Coins.”
Above-Ground Silver Stocks Comparison:
Jan- Voima Gold = 1,600,000 metric tons
World Silver Survey = 79,000 metric tons
By doing some simple math, if we divide the 1.6 million metric tons by 79,000 metric tons, we arrive at the 20 to 1 ratio… VIOLA!!
This is how Jan calculates that there is 20 times more silver in the world than what GFMS or the World Silver Survey estimates. Jan derived his figure on global silver above-ground stocks from charts in the article linked above.
By adding up all the silver mine supply since 1900, including a base of 45,000 metric tons, the total amount equals 1.6 million metric tons. However, this amount wasn’t large enough, so Jan used the estimate from the CPM Group of 1,751,000 metric tons and then divided this amount into the various categories:
Jan states the following in regards to the current World Silver Survey (GFMS) “Stock to Flow Ratio” of 3 to 1 that is too low:
From the quote and the table, readers are supposed to believe the above-ground silver stock stood at 79,308 tonnes by late 2018. Annual mine production in 2018 was 27,000 tonnes, implying a stock to flow ratio of 3.
However, in the World Silver Survey 2019, we also read:
Jewelry, silverware and other finished fabricated products that are in the possession of end-users are not included in our definition of above-ground refined stocks.
But why is jewelry excluded from the data? Silver jewelry should be included for the same reason gold jewelry is included in the above-ground stock of gold: if the price is right, jewelry can and will be sold into the market. We must conclude that the data from The Silver Institute is incomplete. Additionally, in the World Silver Survey 2019, we find all sorts of supply and demand figures that are not correlated with the price of silver, confirming this data is incomplete.
Here is where I differ from Jan’s analysis of above-ground silver stocks. Jan claims that the Silver Jewelry should be included in the calculation of above-ground silver stocks. In his chart above, he shows that approximately 791,000 metric tons of silver are in the form of jewelry, decorative, and religious.
Jan claims that “If the price is right,” then silver jewelry can and will be sold into the market. Really?? To what degree? If we look at the 2015 Silver Scrap Report for the Silver Insitute, silver jewelry recycling is one of the lowest categories:
On an annual basis, about 10% of the silver scrap supply comes from silver jewelry recycling. However, silver jewelry demand in 2018 of 212 million oz (Moz) accounted for nearly 25% of the global silver mine supply of 856 Moz.