Silver Stock Report
by Jason Hommel, August 20th, 2008
For a long time, people have been asking me, "When will silver run out?". They know that the world uses up more silver each year (about 850 million ounces) than the world mines (about 600 million ounces), and that existing demand can only be met by selling existing inventory (such as recycling 200 million ounces, or goverments selling 50 million ounces), so it's a natural question to ask. The question is not implying that mankind will be unable to mine any more. Rumor is that there remains at least about 14-16 years of silver in the ground at "current" prices; while at much higher prices, silver mining becomes more economic, and more deposits can be added to that "in ground" reserve number.
So, the question is really just asking, "When will we run out of "excess" above ground silver that can meet the supply/demand gap, so that the price will begin to really take off upwards?" Clearly, the world has silver in supplies above ground, and such silver supplies are dwindling in order to meet the supply/demand gap. About two years ago, the world started adding to above ground silver supplies as silver investors started buying, (and the silver surveys label investor buying as a "surplus". However, silver recycling was still greater than new stockpiling, which continued to deplete overall silver supplies.
Such a question as "When will silver run out?" cannot really be answered in advance, since nobody really knows how much silver there is, and who owns it, and at what price they are willing to sell it. Again, that brings us back to the nature of silver; it's inherantly private wealth, held anonymously. Estimates on "above ground" silver, in refined, deliverable form have ranged from 300 million ounces to 1 billion ounces, to about a high of 4 billion ounces if you include jewelry and flatware, up to 20 billion ounces if you include all forms of silver that have not ended up in landfills, out of the total of 43 billion ounces of silver estimated to have been mined in all of human history. Furthermore, nobody is arguing that the last bit of silver that exists needs to be consumed before the price rises substantially. The question is really about when will all the unwanted silver, in so-called "weak" hands of holders who don't really want it, be sold, to allow the price to rise to meet the majority of the expectations of the remaining wise investors who have planned in advance to actually store up some of the rare stuff.
But finally, I think the answer has arrived. The answer is "NOW!" Silver has run out, now! Or, in other words, most of the cheap silver has run out.
There are two excellent articles on the shortage of Silver that I'd like to bring to your attention if you have not already seen them:
This one is by "seekingalpha", and is very excellent, and very comprehensive.
The Disconnect Between Supply and Demand in Gold & Silver Markets
The article goes over how the silver shortage is also affecting India.
He also covers the paper silver fraud that is commonplace and "standard business practice" in Wall Street brokerage houses.
This next article is short and powerful, and written by a coin dealer:
The Disconnect Between The Physical Gold and 'Paper Contract' Markets
What's amazing is that last year, net physical silver investment demand was estimated to be about 30-60 million ounces, or about $1 billion worth.
Today, with 90% of the people in the
So, where do you think silver prices are headed? How can most of $14,000 billion enter a market of $1 billion that is already suffering a shortage, and prices not go up, a lot?
And oh yes, what about that current low price?
There's a short story that goes something like this. A lady wants to buy sausage. There are two butcher shops next to each other, one advertises $1.99/lb., the other advertises $2.99/lb. She goes to the $1.99/lb. shop first. But there's no sausage, they are out. So, she goes across the street, and sees sausage for $2.99/lb., and promptely complains about the price. "Why don't you sell it for $1.99/lb like the other guy?" Butcher answers, "Lady, when I'm out, mine is $1.99/lb, too!"
Price means nothing if you can't get the product. Many people are still sending money to dealers who will take your money, but have no silver, and no idea when they can get it.
Be very, very careful about ordering silver right now. Demand to know exactly when they can deliver. If they can't guarantee delivery within a week or your full money back, then consider that they probably don't have it!
Here's what I suggest. FIND YOUR LOCAL COIN SHOP and go there, in person. Or visit the dealers who are recommended at:
In fact, now might be a good time to meet up other Silver Stock Report readers.
I suggest that everyone visit their favorite local coin shop on September 1, at 1PM. That's a Monday.