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Silver Bulls: Visualizing the Price of Silver

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Silver Bull Markets

Silver Bulls: Visualizing the Price of Silver

Silver has always shown its value throughout history. From ancient coins to its use as a global currency during the Age of Discovery, silver has circulated the world to become an important financial asset. Its value continues to shine in the era of the modern finance industry.

Today’s infographic comes to us from New Pacific Metals and it takes a look at the bull markets in silver prices and the future of silver.

Silver Bulls: 1967 to Today

The late 1960s marked the beginning of the end for silver as currency, but also the start of its use in protecting and securing wealth.

In the United States, silver certificates were issued by the Treasury until late 1963, when the $1 Federal Reserve Note was released into circulation. After this, the remaining silver certificates were still redeemable for silver, but this practice ended in 1968.

Since then, silver has had several bull markets in which prices have increased—or as some silver aficionados may argue, the relative value of fiat currency has decreased.

 Percentage GainPrice Range (USD)*Duration
Silver Bull #1 (1967-68)49%$12.50 - $18.5813 months
Silver Bull #2 (1971-74)274%$8.45 - $31.5927 months
Silver Bull #3 (1976-80)544%$18.40 - $118.5048 months
Silver Bull #4 (1986-87)40%$12.47 - $17.4812 months
Silver Bull #5 (1993-95)39%$6.47 - $9.0027 months
Silver Bull #6 (2001-11)827%$6.01 - $55.69113 months
Silver Bull #7 (2015-Present?)90%$15.04 - $28.5356 months

Source: MacroTrends
*Inflation-adjusted data using CPI from BLS, LBMA Monthly prices

That said, not all silver bull markets are the same, nor do they necessarily coincide with bull markets in the price of gold.

Performance: Gold vs. Silver

Despite being often referred to as “poor man’s gold”, silver has actually outperformed gold in five of the six previous bull markets for gold and silver.

There are two ways to look at how silver prices performed during these timeframes:

  1. We can compare silver price performance to corresponding peaks and troughs of the gold price
  2. We can also look at silver prices based on its own peaks and troughs, irrespective of gold

Often, gold prices move first with silver prices quickly following—but then, silver can outperform gold on its own timeline.

 Gold PerformanceSilver Performance Silver Performance
Based on gold's peaks and troughsBased on silver's peaks and troughs
Silver Bull #140%-17%100%
Silver Bull #2455%144%432%
Silver Bull #3715%912%977%
Silver Bull #478%27%94%
Silver Bull #528%63%75%
Silver Bull #6:636%904%45%

Source: CPM Group (Nominal data)

More recently, prices of silver have been on an upward trend since 2015 and some would say we are in a new bull market for the precious metal. For however longer, it is anyone’s guess.

The Future of Silver?

While the future price direction of silver is difficult to predict, this doesn’t diminish the increasing importance of silver’s role as a metal in an electrified future.

As you can see in the demand breakdown below, silver is not only precious—it is useful:

Silver Demand (2019)Millions of Ounces
Industrial510.9
...of which Photovoltaics98.7
Photography33.7
Jewelry201.3
Silverware59.8
Net Physical Investment186.1
Total Demand991.8

Source: Silver Institute

While silver’s uses and applications continue to grow, silver remains a safe haven investment from political uncertainty and economic distress—all while being a cheaper and better alternative to gold.

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Gold

The World’s Gold and Silver Coin Production vs. Money Creation

In 2019, the value of global money creation was over 500 times higher than the world’s gold and silver coin production combined.

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World's Gold and Silver Coin Production

Global Gold & Silver Coin Production vs. Money Creation

Note: Data has been updated to correct a previous calculation error pertaining to Japanese Yen money supply.

Both precious metals and cash serve as safe haven assets, intended to limit losses during market turmoil. However, while modern currencies can be printed by central governments, precious metals derive value from their scarcity.

In this infographic from Texas Precious Metals, we compare the value of the world’s gold and silver coin production to global money creation.

Total Production Per Person, 2019

We calculated the value of global currency issuance in 2019 as well as precious metal coins minted, and divided by the global population to get total production per person.

Throughout, global money supply is a proxy based on the 5 largest reserve currencies: the U.S. dollar, Euro, Japanese Yen, Sterling Pound, and Chinese Renminbi.

2019 ProductionOuncesDollar ValueDollar Value Per Person
Global Gold Coins7,204,982$10.9B$1.42
Global Silver Coins97,900,000$1.8B$0.23
Global Money Supply$4.3T$556.33

All numbers are in USD according to exchange rates as of December 31 2019. Gold and silver values are based on the 2019 year close price of $1,510.60 and $17.90 respectively.

The value of new global money supply was 390 times higher than the value of gold coins minted, and 2,400 times higher than silver coins minted.

Put another way, for each ounce of minted gold coin, the global money supply increased by more than $593,000.

Change in Annual Production, 2019 vs. 2010

Compared to the start of the decade, here’s how annual production levels have changed:

 20102019% change
Global Silver Coins (oz)95,900,00097,900,0002.1%
Global Gold Coins (oz)6,298,3317,204,98214.4%
Global Money Supply (USD)$2,936,296,692,440$4,268,993,639,92645.4%

Annual increases to global money supply have increased by half, far outpacing the change in the world’s gold and silver coin production.

Even more recently, how has production changed during the COVID-19 pandemic?

The COVID-19 Effect

In response to the global pandemic, central banks have enacted numerous measures to help support economies—including issuing new currency.

The global money supply increased by more than $6.8 trillion in the first half of 2020. In fact, the value of printed currency was 930 times higher than the value of minted gold coins over the same timeframe.

Investors may want to consider which asset is more vulnerable to inflation as they look to protect their portfolios.

Want to learn more? See the U.S. version of this graphic.

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Visualizing U.S. Money Supply vs. Precious Metal Production in the COVID-19 Era

Amid trillions in COVID-19 stimulus, this graphic compares new U.S. dollars printed to U.S. precious metal coin production.

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U.S. Precious Metal Coin Prduction

U.S. Precious Metal Coin Production in the COVID-19 Era

Gold and silver have played an important role in money throughout history. Unlike modern currencies, they can’t be created out of thin air and derive value from their scarcity.

In the COVID-19 era, this difference has become more prominent as countries print vast amounts of currency to support their suffering economies. This graphic from Texas Precious Metals highlights how the value of U.S. precious metal coin production compares to U.S. money creation.

Year to Date Production

In this infographic, we have calculated the value of money supply added as well as bullion minted, and divided it by the U.S. population to get total production per person. Here’s how the January-September 2020 data breaks down:

 Total (Ounces)Dollar ValueDollar Value Per Person
U.S. Gold Ounces826,000$1.6B$4.79
U.S. Silver Ounces22,261,500$544M$1.65
U.S. Money Supply$3.4T$10,250.16
U.S. Debt$3.8T$11,578.36

Gold and silver dollar values based on Oct 5, 2020 spot prices of $1,915.93 and $24.47 respectively.

The value of new U.S. money supply was more than 2,100 times higher than the value of new gold minted. Compared to minted silver, the value of new U.S. money supply was over 6,000 times higher.

Production Per Day, Per State Over Time

Here’s how production has changed on a per day, per state basis since 2010:

 20102020 YTD (Jan-Sep)Min-Max Production, 2010-2019 
Minted Gold Coins 78oz61oz12oz-78oz 
Minted Silver Coins 1,945oz1,631oz899oz-2,633oz 
U.S. Dollars$19M$255M$19M-$50M 

Year to date, U.S. precious metal coin production is within a normal historical range. If production were to continue at the current rate through December, gold would be above historical norms at 81 ounces and silver would be within the normal range at 2,175 ounces.

The issuance of U.S. dollars tells a different story. Over the last nine months, the U.S. has already added 400% more dollars to its money supply than it did in the entirety of 2019—and there’s still three months left to go in the year.

A Macroeconomic View

Of course, current economic conditions have been a catalyst for the ballooning money supply. In response to the COVID-19 pandemic, the U.S. government has issued over $3 trillion in fiscal stimulus. In turn, the U.S. Federal Reserve has increased the money supply by $3.4 trillion from January to September 2020.

U.S. Money Supply

Put another way, for every ounce of gold created in 2020 there has been $4 million U.S. dollars added to the money supply.

The question for those looking for safe haven investments is: which of these will ultimately hold their value better?

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