Silver and gold’s supply valuations present a notable disparity. Specifically, silver bullion accounts for nearly 2.5B ounces stored in vaults above ground across the globe with its cumulative market value accounting for $257B. Contrarily, as per the data from David Bateman, gold bullion equals 7B ounces in worldwide vaults, with almost $34.9T in total value. This dramatic discrepancy has triggered questions regarding the potential mispriced status of silver in comparison with gold and uni economics debates over commodity valuation.
Silver’s Market Valuation Presents Wide Gap in Comparison with Gold Supply
The market data indicates that the investible silvers whole worldwide supply denotes just a fraction of the wider gold market. In the case of a per-dollar basis, the theoretical scenario permits investors to buy nearly 135 times over the supply of silver when compared with gold . This imbalance underscores a significant possibility for silver that the current price thereof does not reflect the industrial and economic importance thereof.
The utility of silver has extended beyond the status as just a precious metal. In this respect, it is now serving in medical equipment, solar panels, electronics, and more industrial applications. Amid growing demand, even small spikes in utility can have a substantial impact because of limited supply above ground.
Limited Supply Restrictions Trigger Market Shock Risk as Demand Increases
Keeping this dynamic in view, silver could be relatively sensitive to massive supply shocks in comparison with gold. Another factor affecting the silver market takes into account the limited pace of the inclusion of new supply into circulation after exploration for thousands of hours. This slowness raises the probability of potential supply contraction during phases of increasing demand.
According to David Bateman , the silver stock market is also presenting a dispersed supply across products and industries. As a result of this, the present bullion reserves are relatively scarce. Nevertheless, irrespective of the price difference, gold and silver may have equal valuation in the case of their role in industry, technology, and finance. Even then, there is still uncertainty about whether silver will gain equality in value with gold amid wide market imbalance.
