Chapter 102 Gold and silver 1:16 historical ultra-stable structure

The ancients said: "If gold is the sun, silver is like the moon." In many ancient civilizations, there are 13 months in a year and 28 days in each month.Therefore, the earliest gold-silver ratio was 1:13. In the long history of 5,000 years, the gold-silver ratio has remained basically stable at 1:16.Modern science has found that the ratio of gold and silver reserves in the earth's crust is about 1:17.Coincidentally but not surprisingly, the gold-silver ratio relationship formed by the intuition of the ancients and history is quite similar to the results of modern scientific detection.

This ultra-stable structure of the gold-silver ratio can be effectively explained from two aspects of geology and market supply and demand.Although there is a certain degree of arbitrage space between Europe and Asia in the price of gold and silver, it is manifested in the form of silver flowing east and gold going west formed by "silver is expensive and gold is cheap" in Asia.In this dynamic balance, Europe prefers gold, while Asia prefers silver.In the history of Europe, whoever can control the east-west trade channel can take advantage of the difference in the gold-silver ratio in Eurasia to carry out huge arbitrage transactions of 50% to 100%, thereby obtaining huge commercial profits and controlling the fate of the European continent.

With the discovery of silver in the Americas, the huge supply of 133,000 tons of silver briefly caused some fluctuations in the gold-silver ratio in 250 years, but with the digestion of the large-scale world trade between the East and the West, gold and silver are still historically The inertia returns to the magical balance point of 1:16.Although entering the 20th century, silver and gold prices began to fluctuate violently, mainly because most countries adopted the gold standard and gave up silver currency, which caused silver to appear "excess" for a period of time.As the world's largest silver standard country, China's silver currency continued until 1935, and the United States' silver currency (U.S. government silver certificates and silver coins) circulated until 1965.By 1971, the ratio of gold to silver fluctuated around 1:23.

In 1971, the United States unilaterally announced the decoupling of the U.S. dollar from gold, and "dollar money" became "no gold."This is the first time in human history that the world has entered into a major experiment in the era of pure paper money, and this experiment is still going on today.The pure paper currency system completely abolishes the commodity attribute of currency, and the core element of currency - the function of wealth storage - is completely lost. The pure issuance of paper money and U.S. dollars has led to worldwide price disorder, including serious distortions in the gold-silver ratio system.The gold-silver ratio has been severely distorted from a stable 1:16 in 5000 to 1:60!

Is it less gold? The world's gold stock has increased from about 30,000 tons in 1940 to about 150,000 tons now, an increase of about 5 times in 70 years! Is it more silver? The world's silver stock has dropped from about 300,000 tons in 1940 to about 30,000 tons at present, reduced to 1/10 of that year! If calculated by weight, the current silver stock is only 1/5 of the gold stock.In other words, silver is far more scarce than gold! This huge difference stems from the large industrial demand for silver.Since 1942, the industrial consumption of silver has greatly exceeded the production supply. For decades, silver has maintained a balance between supply and demand by relying on the accumulated inventory of 5,000 years.The current annual demand is about 4,000 tons greater than the supply.Based on the current net consumption of silver, the current silver inventory of more than 30,000 tons is only enough to last another 7 to 8 years. The silver on the ground accumulated by human beings for 5,000 years will be eaten up by industrial demand!

So, how much silver is there in the ground? In 2005, a survey by the US Geological Survey showed that silver will be the first metal to be mined out in human history, and the time is about 12.3 years.Considering that 2/3 of the current silver output comes from associated mines, such as copper, lead, and zinc mines, it is very difficult to significantly increase silver output due to the limitation of other mine mining inputs.While there is still silver in the earth's crust that can be mined, due to technical and cost reasons, it is only worth mining at a much higher price.As of the end of 2009, the latest statistics from the U.S. Geological Survey show that the world's silver reserves are 400,000 tons.Based on the current mine output of 21,400 tons, it can be mined for 18 years [4].As silver provided by government sales and recycling has fallen sharply in recent years, silver provided by mines will account for the vast majority of total supply.Now the world's total annual demand for silver is about 27,700 tons [5]. If it is all supplied by mined silver, then the world's total reserves of 400,000 tons can only guarantee a 14-year supply.Considering that the application field of the silver industry is rapidly expanding, the consumption of silver will rise sharply in the future, and the mining deadline of 12.3 or 14 years will be greatly advanced.

Judging from the historical price ratio between the current price of gold (US$1,350 per ounce) and silver price, the price ratio should be 1:16, that is, US$84 per ounce, which is considered a reasonable level.The price ratio of gold and silver in history is determined according to their quantity.In ancient Egypt, there was very little silver, and its price was comparable to that of gold.Later, more silver was discovered, and gold became relatively scarce.Rare things are more expensive, so the value of gold is higher.Based on this further analysis, there are currently about 400,000 tons of mineable silver reserves in the world, and with the existing stock of about 30,000 tons, the total amount of silver is only about 430,000 tons.Because gold is rarely consumed by industrial purposes, the stock is constantly rising and is currently estimated at 160,000 tons.According to the statistics of the US Geological Survey as of the end of 2009, the recoverable reserves of gold in the world are about 47,000 tons. Taken together, the total amount of gold is about 207,000 tons.It can be seen from this that the ratio of the total amount of gold to the total amount of silver is 20.7:40, which is about 1:2.That is to say, the total amount of silver is much smaller than in the past, and its proper price should be 1/2 of gold, not 1/16.Based on the current $1350 per ounce of gold, the price of silver should be $675 per ounce!The current market price of silver is only around $25 an ounce.In other words, if there is no bubble at all, silver should still have 27 times the upside.As time goes by, silver will further decrease, and the quantity ratio of gold to silver will reach 1:1, and the total amount of silver will be less than gold in the future.This means that the value-added potential of silver in the next ten years may be extremely thrilling!