So, How Much Silver Is Really Out There Somewhere?

So, How Much Silver Is Really Out There Somewhere?

As silver led gold in last week’s breakout, all the old ‘silver shortage’ stories we have heard over and over for the past several years are coming out of the woodwork once again.

Are they believable?  Or are the usual suspects just ‘talking their book’ once again?

The short answer is that there is a whole lot more above ground silver than gold - around 4 to1. 

The longer version, below, is far more lengthy than I had intended, but the proof is in the details.

Actually, silver shortage stories have changed over the years, particularly with regard to the amount of silver supposedly still left for the market to absorb.  I can recall back when it was being widely claimed that there were only three hundred million ‘available’ ounces left, and although that figure does still appear here and there on the least knowledgeable blogs, now that SLV alone is known to hold that amount and more, I am amazed that that old furphy still seems to have some remaining legs.  Think that the SLV holdings are bogus, and all they hold are paper claims not physical silver bars?  Warren has all of their bar numbers, and tracks the movement in and out as the Athorised Participants arbitrage the inventory.

Another newer and often repeated story, usually attributed to the USGS by guys who don’t know that the acronym stands for ‘United  States Geological Survey’ and make up some other name that has the same initials, is that ‘silver will be the first element to go extinct and that it will happen by 2020’, or words to that effect. It would seem that Ted Butler was responsible for introducing that meme into the silver blogosphere with his 2006 posting ‘Freedman’s Theory’ (  As reproduced in rounded numbers, he reported that the USGS stated that as of 2004 silver production was 20,000 Tonnes (643 m oz), reserves were 270,000 T (8.7 billion oz), while the resource base (presumably including by-product silver from other mining) was 570,000 T (18.3 b oz), indicating 14 years of production from the reserves and 29 from the resource base.

Most second hand stories out there only look at the 14 year figure, add it to 2006, and preposterously conclude that there will be no more newly mined silver after 2020.  More recent USGS figures for 2011 ( report annual silver mine production of 23,800 T (765 m oz) and ‘reserves’ (presumably the same as the 2004 resource base) of 530,000 T (17 b  oz), which has only declined 6.53% over the past 8 years.  Clearly, the USGS folks know better than many others that two-thirds to three-quarters of all mined silver is a by-product of primary lead-zinc, copper, gold, and tin mines, in that descending order.  So, the world cannot run out of newly mined silver until mining for all of those other metals ceases worldwide.  That will not happen over the next eight years, or the next 80 years, or the next 800 years for that matter.

Then, there is the issue of existing silver stocks (physical metal holdings), and their availability to the market.  It is interesting that the shortage mavens usually compare the stocks of gold and silver in some version of the following words:  ‘The total amount of gold produced throughout human history is (something like) 130,000 (or maybe by now 170,000) tonnes, and all but a miniscule amount of that is still above ground.  On the other hand (whereas the amount of silver ever produced may be more than the total for gold, if mentioned at all), the amount of silver available to the market is only around one billion ounces (or perhaps three billion in some recent versions).’  Ergo, so the stories go, there is much more gold above ground than there is silver, and therefore one fine future day, silver will certainly be worth at least as much as gold, and will perhaps be even more valuable.’

Note two salient features of such stories: 1) Above ground gold is usually reported in metric tonnes, whereas amounts of equivalent silver are normally reported in millions of troy ounces.  If you convert silver's 3 b ounces to metric tonnes, the  figure above for silver becomes around 93,310, and the claim that there is much more gold than the (supposedly up to only) 3 billion ounces of silver looks far less disparate.  2)  More significantly, note the implied assumption that all of the above ground gold somehow is, or will be, for sale, whereas the amount of silver that is ‘available’ to be brought to market is quite limited (in terms of the seldom mentioned supposed total historical production of the metal).

Let’s focus on the two assumptions in the second feature of the stories in question.  First, is it true that all above ground gold is, at least potentially, available to the market?  I would think that the Vatican will not be selling its liturgical gold, and probably not very many of its ornamental gold artifacts either, at least not until Hell freezes over.  European and other Central Banks in English speaking countries stopped selling gold a few years ago, and government controlled banks in the BRIC countries and those in the Near East, plus others in places like South Korea, Mexico, and the Philippines, have been buying gold in recent years and months. However, those holdings, and others that can be documented, only account for a small fraction of the supposed four billion or more ounces of above ground gold, the majority presumably being in private, invisible, and very strong hands, and some will not even be for sale at any price, at least until a new financial world order is established (and then they may be confiscated).

However, as the shortage stories go, silver unlike gold is in part a significant industrial metal, and is being consumed in sizable amounts in ways that are not economical to recover.  Therefore, silver stocks (physical metal in some kind of storage, not the equities) are declining rapidly, running down the very few billions of ounces ‘available’ to the market.  Evidence for this can supposedly be seen in the occasional lengthy delays in obtaining either silver coins and small bars when prices have declined, or even very large orders of LGD 1000 oz bars, as Sprott has reported.  Bron has recently posted an interesting piece on the first issue ( He covered the second back in 2008 (, and has recently reaffirmed his position in comments on various sites and in personal emails that the Perth Mint has not in the past ever experienced any difficulties in sourcing LGD 1000 oz silver bars in bulk. This hopefully puts an end to any rumors of actual past or current physical shortages in the silver markets.

Back to the stories, one more time, some of which insist that as the supposed silver shortages grow, the COMEX will run out of deliverable silver bars, and will therefore be forced into default, whereupon the price of silver will ‘go to the moon’.  The main problem with such ‘end game’ conclusions is that the COMEX cannot default on silver (or gold) delivery because its rules allow all expiring futures contracts to be cash settled at the discretion of the issuers.  In any event, the COMEX is just an American side show to the LBM, which handles at least ten times the volume of delivered physical silver (and gold) as the CME.  If the London OTC bullion markets ever become disorderly, that would genuinely be a sign of the ‘end times’ for the world’s frnancial system, but that is another matter for another time.

The wild stories aside, what actual evidence is there for the total existing world stocks of refined silver (and gold) that can be found out there on the internet?   The best single source that I could readily find was written by David Zurbuchen.  Seven parts were originally planned, and subsequently ten were listed, although I can only find the first three, all of which appeared in the first half of 2006.  Part 1 ‘The World’s Cumulative Gold and Silver Production’, can be found at and  Part 2, ‘The Silver Deficit (1942-2004)’is at and, and  Part 3, titled ‘The Real Silver Deficit’, appears at and
In Part 1, Zurbo, as he is affectionately (I think) called on Tom Szabo’s and his site, documents four total figures from published and official sources (which partly overlap especially for the earlier periods) for silver production from 3000 BC (or BCE, to be scientifically as well as politically correct) through 2004.  They range from 42.62 billion oz to 48.87 b oz, and average 44.54 b oz.  He also has four compilations of total gold production, but the figures only begin in the 19th century, and deduct various attrition rates of around 10 to 15%.  They range from 4.06 billion oz to 4.3 b oz, and average 4.25 b ounces.  Calculated with the averaged figures, the silver to gold production ratio was very close to 10.5 up to 2005 (subsequently revised in Part 2 to 10.7).  If figures for gold production going back as far as for silver were available, the ratio would of course be lower.

In Part 2, ‘The Silver Deficit’, Zurbo sets out to confirm Ted Butler’s belief that silver consumption has exceeded production since WW II, and he succeeds in doing so.  World silver consumption figures are meager prior to the war, and Zurbo had to make a number of assumptions to compile his data back as far as 1900.  In addition, figures for 1955 to 1984 do not include consumption figures for centrally planned economies (aka the Communist Block), although their production was included, so reasonable estimates were added in.  Also, the consumption figures do not include coinage, so again  significant estimates were included.  Those resulting figures show that there was a world-wide grand total of very close to 40 billion ounces of silver demand from 1900 to 2004, although that figure is reduced to 37 b oz once melted and re-struck coinage is deducted.. Zurbo’s bottom line is that world silver consumption exceeded production for 63 years (1942 through 2004) by a total of 10.6567 billion ounces.  That exact figure is clearly a product of ‘false or spurious precision’, so let’s just say that over that period a more credible estimate for the difference between silver production and consumption would probably be somewhere between 10 and 11 b oz.

Part 3, ‘The Real Silver Deficit’, begins with quotes from Ted Butler to the effect that silver is more rare than gold, and by a 1 to 5 ratio at that.  Zurbo then sets out to refute those claims, which he says Butler has completely failed to substantiate (unless perhaps, in my opinion, he is only considering silver in LGD 1000 oz bullion bars and comparing that to all the gold ever mined).  Once again Zurbo uses multiple sources, starting with the 1954 Minerals Yearbook, which includes a rough estimate that 1/3 of then existing silver was in the form of circulating coinage or held by governments for monetary purposes, 1/3 was in unspecified hoards, and 1/3 had been misplaced or dissipated.  Dubiously proceeding from those obviously over-generalized and no doubt quite notional equal categorical proportions, he uses his Part 1 findings to calculate that by 1954 there were 27.6 billion ounces in the form of coinage, government and private bullion, jewellery, and tableware/sterlingware. 

Adding  production and subtracting demand from Part 2 up to 2005, he comes up with a deficit figure very close to 4 b oz, but that does not factor in recycled scrap, which was primarily photographic residues in that time period (apart from the big early-1980 melt), of nearly 5.5 b oz up to 2005.  But then abrasion of circulating coins has to be deducted (although it could be part of the missing one third).  Putting everything together, including an estimated 20% of the 1954 lost silver that had been found (and apart from an estimated 4 b oz that he says could be enticed into the market by considerably higher silver prices than prevailed in 2005, which would appear to me to be double counting), Zurbo's (modified by me) figures show  that there were just slightly under 21 b oz of above ground silver at the beginning of 2005.  Dividing that amount by the remaining 5.25 b oz of total gold mined over the past 5,000 years or so, yields a silver/gold ratio of just on 4 to 1 (my figure, not his 5.88 to 1, which includes the 4 b oz of silver that he says higher prices could bring onto the market (but from where, as all supplies are supposedly already accounted for?).

Zurbo’s 2004 figures can be up-dated, at least roughly, using The Silver Institute’s supply-demand figures for 2005 through 2011 ( ), which show 6730.7 m oz of supply versus 6,031.8 m oz of fabrication of all kinds, plus 56.9 m oz of producer de-hedging and their residual figure of 641.8 m oz of ‘implied net investment’ (or 'surplus' in some versions).  Adding just the latter figure to the 21 b oz calculated in the previous paragraph, above ground silver at the beginning of 2012 would come to 21.6 b oz.  For gold, the simplest way to arrive at a reasonably comparable figure is to use the USGS 2011 figure of for total cumulative production of  approximately 170,000 T, or 5.47 b oz.  Those figures also produce an above ground silver to gold ratio of almost 4 to 1.

However, note that the accuracy of those silver to gold ratios hinges on assumptions about the proportion of mined silver that had irrecoverably disappeared prior to 1954.  If it was more than one third, the ratio would be lower, and it it was less than one third the ratio would be higher

As this post is already far too long and detailed, a second, and hopefully more straightforward one, will follow in due time to attempt an answer the question of  ‘Where, Then, Is All That Above Ground Silver?’

Slow Loris Larry

Disclosure:  I have owned significant amounts (for me anyway) of physical silver, in one  form or another, since 1977.


S Roche said...

So...there is a shortage of gold!

Great work, thanks.

Slow Loris Larry said...

@ S Roche:

No, not a shortage of gold, only a deep discount on the price of silver.

Since both Ag and Au are monetary metals, a 4:1 Ag:Au ratio implies that the price ratio should be similar. A $400 price of silver in relation to a $1670 price of gold would be reasonable. Is that good enough for you?

Michael H said...


"a 4:1 Ag:Au ratio implies that the price ratio should be similar."

I hope you are not serious.

As KD said in a post about a different subject,

"One Cannot Talk About Supply and Price Without The Third Piece Of the Puzzle: DEMAND"

Unknown said...

If one is concerned about monetary stability - as I know I am - then it just makes sense to hold a combination of physical gold and physical silver, perhaps complemented by other real assets as well. We are not in the precious metals business ourselves, but from talking to people who are what I have heard most commonly is that the ideal ratio of holdings is 60/40 silver to gold. Now, if the post here turns out to be accurate, then one could in theory end up bemoaning the fact that you are not 100% in silver. However, whilst this means one might miss out on some gains if silver truly goes parabolic, you'll still be able to capture a nice chunk of it plus your gold will go up as well. Here in the UK, our debt to GDP ratio is over 500pc, and it does not take a genius to understand that the vast majority of this debt will never be repaid except through currency debasement!
farmland investment funds

Slow Loris Larry said...

@ Michael

No, I wasn't predicting a 4:1 gold:silver price ratio! I should no doubt have written "a 4:1 Ag:Au ratio implies that the price ratio could be similar." And indeed, KD is right as usual: The classic microeconomic ‘model’ says that supply versus demand 'determines' price in a 'free' market, but we don't seem to have one in silver these days.

@ Greenworld

It is probably never wise to be invested 100% in anything, except perhaps in exceptional circumstances, which may or may not be coming.

My personal appraisal of the situation is that gold is the ultimate insurance, and as things get more and more unstable, one would be prudent to have a greater proportion of gold in one's secure possession. That said, there may also be a real need for many small pieces of easily recognizable silver, as in old coins, if things become chaotic at a local level.

However, we are not at that point, yet, and as we know, in a normal 'bull' market, gold tends to lag behind silver in terms of fiat price increases, and the prices of select precious metal mining stocks can have even greater leverage to both.

So, what would be an ideal distribution of Au, Ag, and good PM stocks? That of course depends on individual or family circumstances, and there is no 'one size fits all' solution. One common strategy is to trade gold for silver when the price ratio is high, as it still is now, and then gradually trade silver for gold when (or if) the price ratio approaches the historical monetary ratio. I would add that it would be wise to trade PM stocks for gold if their prices ever get into bubble territory one fine day.

Of course, any conventional ‘Financial Advisor’ will tell you that a significant holding any of the above 'assets' is just plain foolish, if not downright stupid. But I doubt that very many Screwtape Files readers would agree. You need to figure these things out for yourself, as you seem to have done.

Jen Winslow said...
This comment has been removed by the author.
Slow Loris Larry said...

An alert reader informed me personally that some of my Troy Ounce to Metric Tonne conversions in the original posting were incorrect. I have now fixed them, and apologize for the sloppy math.

Nick Laird said...

Don't forget the CRA Report
Billions of ounces.....

freegoldfuturist said...

I made a video about this entry, highlighting the "silver will go extinct meme:"