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.
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:
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.
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 the other hand, 90% of annual gold scrap supply comes from gold jewelry recycling, according to the World Gold Council:
Recycling is the source of gold supply that is most immediately responsive to the gold price and economic shocks. The majority of recycled gold – around 90% – comes from jewellery, with gold extracted from technology providing the remaining 10%.
So, why is only 10% of the annual silver scrap supply from Jewelry compared to 90% for gold?? It’s quite simple. No one wants to go down to the Pawnshop to make $5-10 bucks selling their scrap silver jewelry. If we consider the typical size of a gold and silver ring, it’s worth the time and aggravation to pawn gold jewelry, not silver:
My research found that a typical 24 Karat gold ring will have approximately 5 grams of gold, and a Sterling Silver ring will have about 5.5 grams of silver. Thus, 5 grams of gold will scrap out to be $273, and 5.5 grams of silver will be worth a lousy $3.00 (based on $1,475 gold and $17 silver).
By Jan stating there is all this under reported 791,000 metric tons of “above-ground stock” held in silver jewelry is quite simply… WISHFUL THINKING. When silver reached a high of $50 in 2011, the most silver jewelry recycled was 28 Moz, just 13% of total silver scrap supply that year.
Grand Total = 357,000 metric tons
However, Jan also says that if we include the Industrial silver stocks (852,000 mt), then the Silver stock to flow ratio could be 60/1. I can tell you that most of that 852,000 metric tons of Industrial silver will never be recycled. It’s gone forever. We cannot count silver that was put into electronics that is now sitting 50 feet below a garbage dump as an ABOVE-GROUND SILVER STOCK. This is pure rubbish.
We must remember, while there is a lot of silver above-ground, most of it won’t ever be recycled. Thus, it is better to label this silver as lost RIFF-RAFF than above-ground stocks.
INVESTOR WARNING: Watch Out For Garbage Penny Stocks Like GOLD X
There is a stock called GOLD X that is currently being promoted. I wouldn’t buy this stock even if I were given money to purchase it. GOLD X, formerly known as Sandspring Resources, did an 8-1 reverse spilt, thus pushing its price over $2.00 on the Canadian exchange. Here is the price before the 8-1 reverse split on November 29th:
If a company is changing its name and doing an 8-1 reverse split, it means they are ready to start BAMBOOZLING a new group of SUCKERS. And of course, they are going to get a new group of SUCKERS to invest because every day, a new SUCKER IS BORN.