Thursday , 5 August 2021

Are You A Silver Bug? Take This Silver Quiz To Find Out

It’s time for our annual silver quiz! See how many you can get correct (answers at the end), and more importantly, consider what the data suggests may be ahead for the silver price over the next few years…I will start easy, but let’s see if I can stump a few silver bugs by the end.

Quiz Questions

1. Which silver coin was manufactured first?

  1. Silver Eagle
  2. Silver Maple Leaf
  3. Silver Krugerrand

2. What is the primary reason silver tends to outperform gold? 

  1. It was used in U.S. currency
  2. It is a much smaller market, so incoming funds have a greater impact
  3. There are more silver bugs than gold bugs

3. What is the primary difference between a coin and a round? 

  1. Rounds come in different sizes
  2. Coins are prettier
  3. Coins are produced by governments, rounds by private mints

4. Last year, during the pandemic, silver scrap supply fell.

  1. True
  2. False

5. How many new primary silver mines came online last year?

  1. One
  2. Two
  3. Five
  4. Nine

6. The amount of silver held in inventory by governments worldwide is:

  1. 1 billion troy ounces
  2. 500 million troy ounces
  3. 100 million troy ounces
  4. <50 million troy ounces

7. There are more silver bullion coins in existence today than 30 years ago.

  1. True
  2. False

8. The factor that has the biggest impact on the silver price is demand from:

  1. Electronics
  2. Jewelry
  3. Investment
  4. Medical/Biocides

9. Silver supply fell last year due to the pandemic, but in general is rising.

  1. True
  2. False

Answers

1. Which silver coin was manufactured first?

The Silver Eagle was first manufactured by the US Mint in 1986 (answer A). The Silver Maple Leaf was introduced in 1988 and, while the gold Krugerrand was one of the first sovereign coins ever produced, the silver Krugerrand wasn’t made until 2017.

2. What is the primary reason silver tends to outperform gold? 

The silver price tends to move more than gold, both up and down, because it is a much smaller market (answer B). It takes less capital entering or exiting the sector to impact its price. We believe this will have an enormous impact on the silver price in the next crisis, when the masses crowd in, setting up another huge spike.

3. What is the primary difference between a coin and a round? 

The word “coin” technically implies is was produced by a government mint, sometimes called a sovereign coin, which means it comes with a guarantee for purity and weight. Rounds are manufactured by private mints (answer C)…

4. Last year, during the pandemic, silver supply from scrap fell.

False! Perhaps surprisingly, more silver was added to supply from scrap last year than the year before. The primary reason is because silver prices were higher, prompting industry and scrap holders to recycle for a bigger payout…

5. How many new primary silver mines came online last year?

Just one! (answer A). Only 12 million troy ounces of new capacity came from a new primary silver mine last year, all from the MAG/Fresnillo Juanicipio operation in Mexico…New silver capacity is down a whopping 67% from 2013. and it is expected to go lower in 2021…

6. The amount of silver held in inventory by governments worldwide is…

Only a handful of governments hold inventories of physical silver (the US, Mexico and India are the main ones), and worldwide it totals just 46.8 million troy ounces (answer D). This is equivalent to just three weeks of mine production…

Government Silver Inventories

7. There are more silver bullion coins in existence today than 30 years ago.

False! Despite greater production over the past several decades, the amount of silver bullion coins is lower than the peak in the late 1980s. Here’s what CPM Group’s data show:

Silver Bullion Inventories

8. The factor that has the biggest impact on the silver price is demand from:

Investors (answer C). While industrial demand is poised to grow significantly, historically it is investment demand that has the biggest impact on the silver price. If investors buy it rises; if they sell the price tends to falls, as history shows:

Silver Price Rises and Falls with Investment Demand

The implication here is obvious if you subscribe to our outlook: investors will increasingly crowd into silver (and gold) when the next monetary event strikes – and research shows it is coming.

9. Silver supply fell last year due to the pandemic, but in general is rising.

False. Total silver supply did indeed fall last year—but as CPM Group reports “mine supply has been in a generally declining trend since 2016 for a variety of reasons, ranging from weak silver prices, shuttering of some major silver mines in recent years, and an overall decline in new silver mine capacity. The covid-19 related mine shutdowns were one more issue to the list of pre-existing troubles. Silver mine supply dropped to 729.7 million ounces during 2020, down 4.5% from 2019 and the lowest level since 2012.”…

Are You a Silver Bug?

If you scored 7 or more correctly, we think you’re a…silver bug but [regardless of how you scored]…we think this knowledge will make you a more educated investor [and that]…is the most important thing one can do to prepare for the environment ahead…

Conclusion

With the gold/silver ratio still above 65—a full 30% above its historical average of 50—it remains a strong buy for investors.

Editor’s Note:  The above version of the original article by Jeff Clark, has been edited ([ ]) and abridged (…) for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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