A lot of readers liked our article on how much cash could flood the gold market once institutional investors start buying[1].
Now it’s time to look at silver. And as most readers know, the silver market is much smaller than gold, meaning it could be easily overwhelmed—much more than gold—if these investors begin to take interest.
Institutional Assets vs. Investable Silver
CPM Group estimates there is approximately 62.5 billion ounces of above-ground silver in investable form. This excludes silver that has been used for industrial purposes, jewelry, silverware, etc., and any silver that has been lost or is otherwise unaccounted for.
As we pointed out before, CPM Group reported that if an institutional investor wishes to devote funds to an asset, the minimum allocation is 2%. Some might invest more, while some might invest no funds in precious metals, but if they want exposure they’d likely devote at least 2% of their assets to it.
Here’s what that would look like. This table shows the amount of Assets under Management (AUM) from various groups of institutional investors, and what percentage of that 62.5 billion ounces of silver each of them would gobble up if they devoted 2% or 5% of their assets. I put in red the percentages that exceed all of the investment-grade silver around the world.
You can easily see that almost every category of institutional investor would buy more than the total known above-ground investment metal. The pension fund industry alone would need more than 14 times the amount of silver bullion available.
This isn’t feasible, of course. There just isn’t enough metal to go around. Even if just 10% of these funds wanted to devote 2% of assets to buy silver, it would...