How much has the silver stockpile been depleted?

June 5th, 2009

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During the Great Depression, President Franklin Roosevelt signed the Silver Purchase Act of 1934. That started the world’s greatest stockpile of silver, peaking at 3.5 billion ounces in the 1950s.

As we wrote in Third turning point for silver, the US government sold down its massive silver stock in the 1960s in an attempt to keep its price down. Also around the same time, as we wrote in What determines the gold-silver ratio?,

… scientific discoveries in the 1960s saw the widespread industrial applications of silver.

The problem with industrial use of a metal is that it gets ‘consumed’ and used up in microscopic amounts, thrown away and eventually ends up in the landfill. Therefore, unlike gold, most of the silver ever dug out from the earth are lost through ‘consumption.’ Only jewelery and silverware preserves the silver.

By 1980, only 2.5 billion ounces of silver are left. By 1990, 2.1 billion ounces are left. As in late 2008, only 20 million ounces of silver are left in the US government’s stockpile. Other government around the world did likewise. Today, government stockpiles around the world hold only 0.016 percent of the original 3.5 billion ounces that the US government used to hold!

In other words, the amount of silver left in the world that is available for investment is less than gold! Gold, on the other hand, has a rising quantity of stockpile. If all mining activity are to stop today, the aboveground stocks of silver will only last 4 months!