Will Silver Be Worth More Than Gold? Perspectives On A Coming Silver Shortage

Tyler Durden's picture

While hardly news to regular readers, most of whom have ridden the 80%+ wave in silver in 2010, the following video from Future Money Trends explains some of the key basics about why silver, which is unique in the precious metals basket in that it is also an industrial metal (and has thus sparked much debate over whether or not it, like gold, is "money"), and provides some perspectives on why silver just may one day be more valuable than gold. Some facts: while there are 10 ounces of silver, for every ounce of gold mined, the most of it is not "free flowing" and is locked up in industrial uses; for every $1 in SLV investors still pile $7 in GLD; above ground silver has declined from 10 billion ounces in 1950 to 5-700 million ounces in 2010 (compared to an increase in above ground gold from 1 billion to 7 billion ounces); the gold to silver ratio is at 50x while the average long-term is 15x, industrial demand for silver is up 18% in 2010; and much more. Of course, there is no reason why one has to pick one or the other. Historically both have been tiered stores of value, with the Roman empire going so far as to succumb its silver currency when the going got tough. The simple fact is since global deleveraging will likely continue and since the US government will need to print trillions, most of it monetized by the Fed, the ongoing currency dilution will continue to result in increasing P prices: pretty simple. The only downside case to gold and silver holdings would involve massive asset liquidations a la September 2008, which also would mean that the Fed has lost control, that the US dollar is no longer the reserve currency, and that after the smoke settles, non-fiat currencies will rise again. And that includes both gold and silver.


h/t Daniel

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joemayo's picture

Silver aquired at a 65:1 (or greater) ratio buys a lot more gold today at 46:1, and for that I am very happy.

midtowng's picture

The video was a bit on the hyperbole, but the major facts were correct. Silver should outperform gold for the rest of the precious metals bull market.

 Eventually we should see a 15:1 ratio again.

dlmaniac's picture

I'd like to wait til silver's investment demand overshoots the industrial demand and then make a call on where gold VS silver ratio is heading.


Here's one stat I've noticed based on my rough reading of this year's sales # @ US Mint: For every 2000 US$ going into gold coins, 1000 went into silver coins. Since no one buys them as commodities @ US Mint, it should be a useful indicator of general public's investment interest in gold and silver for now.

Azannoth's picture

Silver could soon be a new Rare Earth element ?

Lets Hang Parliament's picture

And the Chinese mine more of it than anyone else....

Sean7k's picture

A lot of their production is recycled silver as an import as they do not care about polluting their land in the reprocessing. As silver gains in value, this will probably change.

trav7777's picture

silver???  No, peru and mexico

DoChenRollingBearing's picture

Peru is the number one producer of silver, correct.

Temporalist's picture

Completely wrong.  Gold yes, silver no.  Trav and Rud correct.

66Sexy's picture

Siver has never been hoarded by investors like we're seeing today; which means silver could easily be used as money as it filters down among the population.

If the FED wants the psychological benefits of a domestic wealth effect, they just need declare a silver backed currency -- and revalue silver @ 500 an oz.

Azannoth's picture

If we have 7B oz. of gold and ONLY 1B oz. of silver, I guess it would be easier to back a currency with gold

66Sexy's picture

for the record: It wasn't me

SilverRhino's picture

William Munny is that you?

RafterManFMJ's picture

Well, I don't have any pets and I don't like my neighbors.  And I've been known to eat tripe, so please pressure cook the guts if you can.  The ball talk I believe we all can do without.

perchprism's picture


After reading your silly threats, I junked you.

akak's picture

Damn, 36 junks and it wasn't even Leo or Harry!

StychoKiller's picture

Non rompa prego le mie gonadi, grazie!

Savyindallas's picture

Please be assured it wasn't me either. and for the record, I don't even have a dog.

Bearster's picture

You must be very young, and haven't read much yet.

h3m1ngw4y's picture


totally off limits thinking :-)

it is hoarded - it filters through the population - the former or the later? *g*

500$ per ounce would never do the trick. the revaluation will be done by the physical holders

the currency backed by gold? another fail in due time google "freegold" to gain perspective



jbeyer's picture

Are we really supposed to take this BS seriously when this idiot calls it a "Cadillac converter" (catalytic converter) and pronounces soldering "SOLDering"?


Mad Max's picture


But remember that a blind squirrel sometimes finds a nut, and enough monkeys on typewriters will eventually pound out a GAO report.

Dr. Sandi's picture

enough monkeys on typewriters will eventually pound out a GAO report.

Damn, I think that's where they ALL come from. No wonder they're a little delayed sometimes.

JonNadler's picture

that's right if you're going to listen to an idiot about silver, listen to me, at leat am a senior ANALyst for a major PM dealer who doesn't really sell any PM's although we have them, but people don't buy them from us because they're smart and see silver going back to $3. Then you may ask why are we in business? Well, if I answered that I'd have to kill you, or a JP Morgan thug would, I mean I don't get involved with the messy side of the business, that's why I went to college for

akak's picture

My my Jonny, don't you sound perky today!  You must have just taken a refeshing dip in one of the ol' Kitco precious metals pools.  Oh no, wait, my mistake ---- we all know that those pools are empty.

A Nanny Moose's picture

..or he slept at a Holiday Inn Express last night.

barkster's picture

thank you, miss south carolina...

VegasBD's picture


Made me laugh...even with this hangover. thx

DoChenRollingBearing's picture

I hear you about why you went to college...

That's why JP Morgan HIRES thugs.

strannick's picture

Mr. Nadler.

The inaccuracies of your gold price predictions for the last decade, along with commentaries penned for the gremlin denizens of fantasia, definately are indicative of college credentials.

I anxiously await your 2011 price forecast.

Would I be presumtuous to assume it calls for sub-1000$ gold when the bubble bursts, based on decreasing Indian jewellry demand, and a resurgent US$ and Treasuries market, despite the fear-mongering of conspiracy theorists?

Please post your 2011 portfolio for us, so we can short it and all get rich.


akak's picture

Would I be presumtuous to assume it calls for sub-1000$ gold when the bubble bursts, based on decreasing Indian jewellry demand, and a resurgent US$ and Treasuries market, despite the fear-mongering of conspiracy theorists?

Strannick, you forgot about all those unsightly piles --- nay, MOUNTAINS --- of scrap gold just littering the landscape!  Why, I just tripped over several of them today already!  Damn barbaric relic!  WHEN will these superstitious peasants realize that the future is going to be made of PAPER?!

AnarchoCapitalist's picture

Thank you. I thought I was hearing it wrong, I had to rewind it twice. I don't understand why people can't just let the facts speak for themselves. Why do they have to overemphasize every single sentence? He has good points, but he completely undermines them with his presentation.

Matt's picture

I think you missed the point of the video. In my opinion, it isn't an informational video; it is an advertisement for a product (his website, not silver).

Byte Me's picture


And the retard also quotes 1950 population as the 1980 figure and proceeds to extrapolate growth % from this erroneous value (1980 pop was around 4.2 Billion).

What other asserted figures are being misrepresented? We do not know. A full audit of his sources would be nice. None is provided.

I'd also question what validity Ag use in solar power especially by 2030, by which time we'll probably be using printed polymers incorporating organic substitutes.

Yes, Ag has many more industrial uses than Au. Big surprise, but it ain't used in cat converters - that's Pd and Ni (and others) - besides cc's are recycled.

Although I would support the 'higher price hypothesis' , this vid has factual errors and the asserted data needs corroboration.

Red Neck Repugnicant's picture

The video also claims that above ground stock of gold is up 600% since 1980.

Meanwhile, the Gold Fields Mineral Services Ltd (an independent, London-based consultancy and research company     http://www.gfms.co.uk/index.htm ) asserts that above ground gold stock rises by about 1.7%/year over the past 50 years.  

Disinformation is funny. 

perchprism's picture


I have a plan for your 2011 economic activity:  Blow me.  You'll earn $0.25.

Red Neck Repugnicant's picture

Isn't this the same guy who wears goofy American flag shirts and makes the videos for the National Inflation Association?

Or is it someone trying to copy his exact style?

Those videos at NIA are a bit like a Glenn Beck episode.  They start with indisputable truths, then quickly unravel into lunacy and nonsense. 

If you watch those videos, you won't buy precious metals.  You'll buy razor blades and cut your wrists. 

akak's picture

If you watch those videos, you won't buy precious metals.  You'll buy razor blades and cut your wrists. 

Please, RNR --- BUY BUY BUY!!

Temporalist's picture

Yes he is the very NIA video guy, does most of his videos, and is clearly dead set on trying to get people to follow his investment advice, probably trying to start a financial newsletter and have people pay to subscribe to him.

That being said, I still buy silver without the hyperbole, although there may be a hyperinflationary event.

enobittep's picture

Yes it is.

These NIA guys are bankster wannabes! Opportunists that are claiming they are on a crusade to inform the public of the coming inflation - yea like anyone with 1/2 a brain couldn't figure out by reading various financial blogs on the web (I.e ZH).

They begin all the reporting with facts and then go into full hyperbol mode.

There gig is getting people panicked and then recommend some pitiful penny silver stock (which they invested in 2 months earlier). The stock jumps over the next few months - at which time they are probably dumping there shares and buying legitimate silver stocks (I.e. Hecla or CDE).

Go to the NIA website and go to stocks. They just did this with Girabaldi Resources Corp. - note the disclaimer regarding the NIA president's investment in this company.

Dr. Sandi's picture

If you watch those videos, you won't buy precious metals.  You'll buy razor blades and cut your wrists.

Not me. I'll cut somebody else's wrists who needs it more. But I like your sharp thinking on the subject.

dwdollar's picture

I'm very skeptical.  If it gets close to the price of gold, a lot of that "consumed" silver will be found, melted down, and coined.

tmosley's picture

Mining landfills is much more difficult than you seem to think.

Platinum is much more expensive than gold, but only about 18% of the platinum consumed industrially is recovered.  This is because each use is so small it isn't worth it.  Once mines RUN OUT or cost of recovery explodes it might become profitable to do that.  It's going to have to get a LOT higher, though.  Many applications use so little, but do it on a huge scale (think silver sulfadiazene used in babies' eyes, or silver impregnated socks, or catheters.  That silver is absorbed into the body.  What are you going to do, mine sewage for silver?  You'll only get a few ppb if you are lucky.

Bananamerican's picture

i don't mind mining sewage if i can find the muthafucka who impregnated my socks!

Cognitive Dissonance's picture

For the past 6 or 7 years, I've assumed that when the herd finally recognizes the stealth destruction of their fiat paper currency by the powers that be and begin to search for alternatives, Silver will be viewed as more accessible and "affordable" than Gold, at least for the masses. This is why I have concentrated about half of my PM buying in Silver.

It stands to reason that when the panic begins, the average Joe will try to "buy" the "cheapest" hedge. Shaking their belief in the static value of the dollar will be very hard. Thus even as they try to off load their dying dollars, they will still think about them as static and how they can get the most "value" for their FRNs. They have been conditioned to believe "cheaper" is better for them in many things.

Silver will shine for this reason. How long is the real question. If you live by the sword of public opinion and herd mentality, you eventually die by that same sword.

living on the edge's picture


I agree with your assessment that the common man will buy silver once the fallacy of an economic recovery is exposed as a fraud. When the masses realize the financial world is crumbling gold and silver will explode with silver leading the way. I don't expect silver to ever have a valuation approaching that of gold and I duly intend to sell my silver in favor of gold at some future point.

Cognitive Dissonance's picture

Selling (or bartering) either directly to Gold or whatever can be used as an intermediary that can then be sold for Gold. In this case it doesn't matter what the journey is, just that the destination is eventually Gold.