Why? It all comes down to ENERGY. While I have repeated myself many times over about energy being the driver of the economy, there is a large percentage of precious metals analysts and investors that still don’t “GET IT.” And even worse than that, one website that publishes my work, REMOVES the energy content from the article, while only allowing the precious metals subject matter to remain… LOL.
I am going to say this once more… IF YOU DON’T UNDERSTAND ENERGY, you will not understand the real reason to own precious metals. For example, after my last video, Gold & Silver Investing: The Amazing Untold Facts, one commenter stated that after they watched the information, they “WOULDN’T SELL THEIR SILVER.
This is the key. If precious metals investors DO NOT understand the energy, they may LOSE FAITH in holding gold and silver in the sea of conflicting financial and economic information. I continue to hear some precious metals analysts say negative things about owning silver during a recession or economic downturn. Well, for one thing, silver did very well during very high U.S. Unemployment from 2009-2011. When the U.S. Unemployment Rate was 4.5% in March 2007, silver was trading at $15. However, by early 2011 when U.S. Unemployment was at 9%, silver reached $50.
The Important Silver To Gold Production Ratio & What That Means Going Forward
As the centuries went by, the world silver to gold production ratio declined. From 1901 to 2000, it fell to just 7.7 to 1. The figures in the chart above are in a million troy ounces (oz). Now, if you don’t believe ENERGY is a KEY FACTOR, take a look at the production level of silver and gold during 1901-2000. When oil came on the market, it allowed gold and silver production to increase exponentially.
The next chart shows the total Global Non-Investment Silver Demand (excluding silverware). As we can see, of the 7,683 million oz, or 7.7 billion oz of Non-Investment Silver Demand from 2010-2019, only 1.8 billion ounces were recycled. Thus, approximately 5.8 billion oz of that Non-Investment demand over the past decade is likely lost for good. Of course, we could see more recycling of this past Industrial and Jewelry consumption, but probably only a small percentage.
When countries removed silver from their currency, it was recycled and fed back into the market to fill the insatiable industrial demand that took off during World War 2. The world basically ATE ITS SEED CORN of MONETARY SILVER so we could have more fancy gadgets and technology.
This chart should help precious metals investors understand why silver will outperform gold in the future. There just isn’t that much more above-ground investment silver stocks in the world as there are gold stocks. Moreover, 41% of the “known” total world cumulative gold production from 1493-2019 is held in above-ground investment gold stocks compared to only 5% for silver.
Silver Investors have been given a HUGE GIFT that most don’t realize. Because the world consumed, 10’s of billions of ounces of silver for industrial and jewelry fabrication, most of this will never come back to the market. Which means, when push comes to shove, investors looking to protect wealth, won’t find that much silver available to acquire… only at much higher prices.
Steve St. Angelo (SRSrocco)
Independent researcher Steve St. Angelo (SRSrocco) started to invest in precious metals in 2002. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.