So How Much Silver Does the World Have?
For anyone new to the silver market, it may seem that an obvious question to ask is - How Much Silver Does the World Have? It is a good question, and actually you don't see it discussed very much, even though it is clearly an important piece of information to know if you are thinking of investing in silver. The answer is a bit complicated, but it is possible to get some idea. Let's use the USGS (US Geological Survey) as our information source for this topic.
While all estimates are subject to revision over time as more information is obtained, we have to start somewhere. The USGS data on world silver reserves is as good a source as any. It's their job to try and estimate how much silver the world has and they update it every year. Here is a link to the 2020 report on silver (for 2019) and here is the link to the latest 2021 report, just released in January 2021. You can access both reports to compare and see how the estimate changed from 2020 to 2021 (note: they revised it downward in 2021 by more than just the silver reserves produced in 2020).
These reports contain some interesting data on the US production and use of silver, but for this article we will focus on the global numbers in the reports. First I will just paste in the raw numbers from each year below and then offer some comments on them. The reserves listed here are reserves in the ground that have to be extracted to be available for supply.
2021 Global Data
World Mine Production and Reserves: Reserves for Australia, Peru, and Poland were revised based on new information from official Government sources (all figures in tons, one ton = 32,150 ounces):
2020 Mine Production 2021 Estimated Reserves
- United States 1,000 26,000
- Argentina 1,000 N/A
- Australia 1,300 88,000
- Bolivia 1,100 22,000
- Chile 1,300 26,000
- China 3,200 41,000
- Mexico 5,600 37,000
- Peru 3,400 91,000
- Poland 1,300 70,000
- Russia 1,800 45,000
- Other Countries 3,500 57,000
World Totals (rounded) 25,000 (804 million oz) 500,000 (16.1 Billion oz)
2020 Global Data
World Mine Production and Reserves: Reserves for Australia, Peru, and Poland were revised based on new information from official Government sources (all figures in tons, one ton = 32,150 ounces):
2019 Mine Production 2020 Estimated Reserves
- United States 980 25,000
- Argentina 1,200 N/A
- Australia 1,400 90,000
- Bolivia 1,200 22,000
- Chile 1,300 26,000
- China 3,600 41,000
- Mexico 6,300 37,000
- Peru 3,800 120,000
- Poland 1,700 100,000
- Russia 2,100 45,000
- Other Countries 3,600 57,000
World Totals (rounded) 27,000 (868 million oz) 560,000 (18 Billion oz)
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So, How Much Does Silver Does the World Have to meet the future Demand for Silver?
First, let's emphasize that these estimates change every year based on new information. In 2020 for example, less silver was produced and at least some of that was due to the impact of the COVID pandemic on mining operations around the world. Each year mining companies spend millions of dollars looking for new reserves. If they are successful. these estimates for total global reserves could hold steady or go up even as 27,000 or so tons of them are mined every year under normal conditions. So there are clearly moving parts and unknowns to these numbers.
What we can do is take the numbers they have and make some observations as follows:
- For whatever reason, the USGS determined that the world had 60,000 less tons of silver reserves at the end of 2020 from their estimate at the end of 2019. If we assume 25,000 of those were from mine production in 2020, they still made a downward revision of 35,000 tons. Most of the downward revision was in Peru and Poland.
- We know these estimates could be off some, but they still give us some idea of how much silver is in the ground globally. Taking the numbers as reported, we have an estimated 16 Billion ounces of silver. That sounds like a lot until you realize industry/jewelry alone is consuming over 700 million ounces a year. That excludes any silver bought and held for investment purposes. Add that in and more than 950 million ounces of silver are demanded right now. That means the current global reserve estimate in the ground would meet that demand for about 17 more years. If we don't find more new significant reserves soon, what will more than likely happen is that annual production will decline and simply be unable to meet demand much sooner than 17 years from now. If supply is unable to meet even industrial demand, silver will certainly be a potentially explosive market in the years ahead. Of course investment demand will still be out there as well and is likely to grow given current central bank monetary policies. It will be interesting to see if the recent surge in silver investment interest exemplified by groups like Wall Street Silver on Reddit will continue to grow and be sustained or will fade if silver does not move quickly enough for that kind of new investor. Regardless, healthy investment demand will still be present.
- We know that not all these reserves in the ground are alike. Some are less expensive to extract from the earth than others. Some are pure silver. Most of the silver in the earth is combined with other metals and produced as a by product. I saw one recent estimate that about 72% of silver currently produced is by product silver and 28% is non by product production. The 28% would be about 225 million ounces of reported 2020 production. What happens in the coming years if the producers of that 28% cannot mine silver profitably at the current silver prices?
- The cost of finding new reserves and producing them continues to rise. Because the price of silver has sagged somewhat in recent years, new exploration has dropped off. Lots of new silver mines to replace the production now starting to decline are not on the near term horizon. To provide incentive for anyone to build new mines, they have to believe the price of silver will go up because the costs are going up. Again, what happens if the miners producing the 28% non by product silver determine they cannot find and extract new reserves for $25 per ounce in the future? Why would they build new mines?
The raw numbers above tell us that the world is likely to need a lot more silver to meet future demand than we estimate there is in the earth right now. We also don't know how much of the reserves we do believe exist can be actually be mined at or below the current price of silver because most of the easier to mine reserve deposits have already been found. Several new sources of demand are appearing on the horizon for silver as green energy moves forward.
It's not necessary to speculate or make wild future silver price forecasts based on monetary and investment demand for silver to make a case for silver as a long term investment. Without question, that demand drives silver prices sharply up and down as it rises and falls with current events. In addition, monetary policies in place around the world are conducive to increased investment demand for silver in the coming years. At any time, investment demand can spike up or down sharply.
The numbers above however show us that there is a steady and reasonable base case for silver in the years ahead simply on the basic future supply and demand projections for industrial uses. You might think of investment demand as icing on the cake when that kind of silver buying rises above its norms. Combined, they make a reasonable case for rising future silver price, and you can use real USGS numbers to make the case.
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Added note: How Much Silver Has Been Found in the World? USGS has that answer as well.
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