Pourquoi l'argent est un investissement qui va superformer les placements dans l'or ?
Subject: Ted Butler: You do the math
By Theodore Butler
Tuesday, July 12, 2005
Here's a recent e-mail exchange between a reader and myself. It was
in reaction to some of my recent articles asserting that gold is
more abundant than silver.
Question: Are you saying that silver is rarer than gold in absolute
terms? I understand that, in terms of silver in the ground and the
rate of use, in some sort of relative terms silver is rarer
than gold. But you seem to be saying that in absolute terms silver
bullion is rarer than gold bullion. Do I understand you correctly?
It seems impossible that silver, an industrial as well as a precious
metal, would be rarer than gold in absolute terms and yet cost only
1/60th as much. Has the silver manipulation actually distorted
prices to this degree? I am sure others are as confused as I am
about this. It does not seem to make sense. Was there a tyop in your
article? Or have I made some horrendous error in my math? (That is
Answer: Yes, that is exactly what I am saying and have been
saying all along. The very first article I wrote for Investment
Rarities in November 2000 had that issue as the central point.
I understated the real figures in the article because I was talking
about known silver bullion vs. known gold bullion. Bottom line:
There is three to five times as much gold in the world than silver
on a physical ounce by ounce basis, so silver is much rarer than
gold. But when you put a dollar amount on it, the relationship goes
through the roof. In dollar terms gold is 200 to 300 times greater
in value than silver. I've written many articles on this, so perhaps
I wasn't clear enough and will try harder in the future. In simple
terms, anyone who owns gold in lieu of silver needs to have his head
* * *
I would like to expand on this theme a bit -- namely, why I feel
that silver is a much better holding than gold.
Let me assure you that I approach this controversial issue with
constructive intentions. The last thing I want to do is to insult my
gold friends. I harbor the best of intentions toward them by
suggesting that they move some of their gold into silver.
First, I believe that one's capital will grow more in silver than it
will in gold. I think there are many advisers who believe this yet
are hesitant to say so for fear of offending gold investors.
Instead, they say you should hold both gold and silver. I disagree
with that. Gold and silver are not one and the same, and it is
reasonable to assume that they will have different performance
results in the future. Analysts should be clear in their
expectations for either.
Second, because we have not witnessed any tremendous price
performance difference in the past few years between gold and
silver, gold investors haven't missed the boat yet by not
switching to silver. In other words, because gold and silver prices
have generally climbed by the same amount since I have been writing
these reports, there hasn't been much gained or lost by being over
weighted in one or the other. That will change dramatically, in my
opinion, in favor of silver. But for now, gold investors can still
get just as much silver for their gold as they could when silver was
$4. That's a great opportunity.
Third, by making the switch from gold to silver, gold investors may
actually help to boost the price of gold. That's because even the
smallest flow of gold money into silver would set the price of
silver flying, which, in turn, should impact the price of gold. As I
have written before, the value of half of 1 percent of the world's
gold comes to an amount greater than 100 percent of the value of all
the silver in the world. Those numbers are so profound that they may
be difficult to comprehend. Once you understand them, you may not
hesitate to switch gold into silver.
Although I have been writing of the rarity of silver compared to
gold for years now, the numbers in total dollar terms are so
staggering that you can't grasp the enormity of it.
That's what I think happened to my e-mail friend above. How can an
item so rare be worth such a small fraction of the more plentiful
item? There is nothing in your life's experience to reconcile this
with. This is new stuff. Your only hope of grasping it is to go
someplace quiet with a pencil and paper and play with the numbers.
There are 4 to 5 billion ounces of gold in the world (according to
the World Gold Council and others) but only half a billion to a
billion ounces of silver (according to the Silver Institute and
others). You know the current prices. Do the calculations. Here's
what you'll find. There is more than $2 trillion worth of gold in
the world. That's $2,000 billion. The amount of gold increases
daily, at current prices, as new gold is added to inventory. There
is no more than $7 billion worth of silver in the world, at current
prices, and every day there is less silver in the world, due to the
One half of 1 percent of $2 trillion is $10 billion. So the total
dollar value of all the silver in the world is less than half of 1
percent of the total dollar value of all the gold in the world. If
silver were to triple in price and gold's price remained unchanged,
the silver would still be worth only 1 percent of gold's total
value. On a per-capita basis, there is more than $300 worth of gold
for each of the 6 billion people in the world, versus little more
than $1 in silver.
You have been taught, and know intuitively, that something more rare
than something else must be more expensive. That is not the case
with gold and silver. In addition, the substance more rare is a
vital necessity in modern life, while the more plentiful item is
basically a luxury. That the rarer, needed and disappearing material
is priced incorrectly is what presents the opportunity of a lifetime.
Either these numbers and my thinking are wrong, or the price of
silver is wrong. If you think I am right, then the trick, of course,
is to absorb that knowledge and act on it before the masses catch
on. I can tell you that very few people realize that silver is rarer
than gold, or that all the silver in the world is worth less than
one half of one percent of the world's gold. Certainly, I would
never publish numbers or facts that I knew to be incorrect. But it
is up to you to verify my calculations and assertions. If you take
the time to do the math, I think you will be compelled to buy silver.