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History of Silver, Part II: the great “build”

Articles & Blogs - Silver Commentary

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In Part I of this series, I provided a brief exposition on the birth of silver mining, and explained how and why silver came to be universally considered a “precious metal” (and “money”) by humanity.


In Part II, I will provide an outline of the development of silver mining, and the huge growth of global, silver stockpiles which accompanied such production-growth – and which ended in the last century, when modern technology came up with an endless list of new applications for silver.


As humanity entered the “Middle Ages”, production of silver had been hampered by two constraints: the lack of new deposits/mines to offset the depleted reserves of older “First World” mines, and the primitive technology of that era – which made only rich, near-surface deposits feasible to mine.


Concurrently, two changes occurred, which allowed a dramatic increase in the amount of silver produced in the world. First, in the 15th century, the Americas were “discovered” (a very large historical “slight” to the indigenous peoples of these continents, along with the Nordic explorers who had reached North America centuries earlier).


Nevertheless, it was the highly-publicized expeditions of 15th century explorers (and those who came after them) which allowed the economic “development” of the Americas (i.e. the exploitation of their vast wealth of natural resources). Among the most-highly prized resources of the “New World” were precious metals.


Meanwhile, with science emerging from the Dark Ages, improvements in mining technology allowed a vast expansion in the production of silver and other metals. Bolivia was the first New World target for silver mining. According to data from the Silver Institute, between 1500 – 1800 A.D. Somewhere around 1 billion ounces of silver were extracted there.


However, while Bolivia was the initial destination in the Americas for silver mining, Mexico soon became the largest silver producer. Over the same time frame, there was an estimated 1.5 billion ounces of silver produced in Mexico, with the majority of that production occurring in a single century: from 1700 – 1800.


The third, principal producer in the New World was Peru. Silver mining in Peru did not commence until significantly later than in Bolivia or Mexico. However, by 1600 it is estimated that annual production in Peru had reached roughly 3 million ounces per year, with more than half a billion ounces extracted by 1800.


To provide some perspective as to how important these new centers of silver production were, from a global perspective, between 1500 and 1800 these three New World producers accounted for roughly 85% of the global silver trade – despite the fact that in 1500, silver production was just beginning there.


By 1800, silver production was moving north – into the United States. Large deposits were discovered in the United States, most notably the “Comstock Lode” in Nevada. With these new mining capitals providing vast quantities of ore for miners, and with the steady improvement in mining methods and technologies, global production continued to rise. By the latter half of the 1800's, annual production fell somewhere between 40 to 80 million ounces per year.


Naturally, gold mining and the global production of gold followed a similar trajectory to that of silver mining (but that's a whole story unto itself), and large stockpiles of gold and silver were accumulated in the form of jewelry and other ornamental applications (in the hands of private entities), and large inventories of bullion (held by governments) – which formed the basis of our global monetary system (in an era when people actually possessed real “money”).


Throughout this era, the amount of mined and refined metal continued to increase even faster than global population growth. This continued on into the early part of the 20th century. And then things changed!!


In our own modern era, rapidly evolving technology and mass-production of an enormous array of goods altered silver's value in our society from being only a precious metal (and “money”) to becoming an ever more important “industrial metal”.


Noted silver researcher and commentator, Ted Butler, provides us with some information as to how huge those global stockpiles were, at their peak (in “A good time to buy Silver”): “In 1959, there were about 9 billion ounces of silver bullion-equivalent in the world population of 3 billion...a per capita amount of 3 ounces for each of the world's citizens...”


In just 50 years since then, these numbers have changed enormously. The paradigm where silver production produced global stockpiles of silver which continually rose faster than our global population ended – permanently. This was a market trend which had been intact for over 2,000 years.


To find out how dramatically this trend has been altered (and reversed), you will have to read Part III (or do your own research!). In the conclusion of this series, you will see why “silver bulls” are so rabidly enthusiastic about the future – for those who are buying silver bullion products (real bullion – not “paper promises”), and accumulating positions in quality silver miners now.


Gold may seem to shine brighter for most people looking at precious metals investments today. However, the Metal of the Moon is poised to “eclipse” the Metal of the Sun in the future, and most likely, the very near future. When that day arrives, silver will completely shed its label as “poor man's gold”.

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