Your Guide to the Understanding the Silver Market

THE VALUE OF SILVER

Silver is a universally recognized means for investors to preserve wealth and protect against financial calamity. It has proven its worth in the face of inflation, recession, currency fluctuation, market collapse and social upheaval.

Understanding the history and economics of silver will strengthen your investment strategy.

SILVER DEMAND

In use for millennia around the globe, silver has secured its position in financial markets in today’s modern economy. The unique history and properties of silver allow it to be a proven store of wealth, a vital industrial resource and a timeless artistic medium. With growing investor demand and ever-expanding commercial applications, silver will continue to be a universally sought-after commodity.

SOURCES OF DEMAND

Jewelry/Silverware

Silver’s luster, resistance to tarnishing and malleability are properties well suited for the fabrication of jewelry and silverware. Silver jewelry accounts for 20% of total global silver demand. Silverware represents 6% of global demand. For these uses, silver is often alloyed to a small proportion of other metals, such as copper, to harden it. Sterling silver, for example, is 92.5% silver and 7.5% copper and has been the standard in many countries for silver jewelry since the 14th century. Jewelry demand is particularly strong in South and East Asian.

Investment

Representing around 20% of the market, investment demand for silver has been a significant portion of total annual silver supply over the last decade. Silver has been a store of monetary value for over 4,000 years, and it continues to play an important part in investor portfolio diversification. Silver is viewed as an attractive hedge against a decrease in the value of currency and inflation, attracting investors during times of uncertainty.

Industrial Applications

Global industrial demand accounts for more than 50% of total silver demand. Silver has distinctive physical and chemical properties that make it an essential and irreplaceable component in numerous industrial applications including – batteries, medical technology, photography, and catalysts. Silver is one of the world’s best conductors of electricity and is used in electronic components of common items such as solar panel photovoltaic cells, computers, televisions, and cell phones. The exponentially growing demand for new electronics will require ever more silver to meet it. Modern life could not exist without silver.

SOURCES OF SUPPLY

Mining

Silver supply is primarily driven by mined silver production. It accounts for approximately 80% of global supply. Only around 30% of silver produced globally comes from ‘silver only’ mines. The remaining 70% is a by-product of lead/zinc, copper, gold, and other operations. The world’s largest silver mining countries are Mexico, Peru, and China.

Recycling

Recycling accounts for the balance of the world silver supply. Industrial recycling being the largest source of non-mined silver. The amount of recycled silver is increasing as demand rises.

With silver supply always chasing an ever-increasing demand, silver prices are set to keep rising.

HOW MUCH SILVER IS THERE?

Total silver production from pre-history till now is estimated by the U.S. Geological Survey (USGS) to have been about 1,411,475 metric tons. However, 634,199 tons have been lost through history to corrosion or to landfills. The USGS estimates that the United States only has 25,000 metric tons of silver in the ground left to extract.

SILVER AS CURRENCY

Silver has been used as a currency since earliest recorded history. Large-scale silver mining developed in Anatolia by 3000 BC. This was to meet the demand from the first ancient city states, which used the metal as a common medium of exchange.

In 1200 BC, Athens opened the Laurium silver mines. The discovery and exploitation of the massive silver seams at nearby Laurium enabled ancient Athens to finance an army and navy, and win control of the Aegean from the Persians.

In 200 BC, Spain became the major supplier of silver for the Roman Empire. Silver from Spain fueled the ancient economies of the Mediterranean for centuries. Spanish silver financed the expansion of the Roman Empire, supplying up to 200 tons of silver a year at peak production. These were the largest silver mines in the world, until the Spanish conquest of Central and South America.

In 1545, Spanish conquistadors discovered the massive silver deposits of Potosi, in Bolivia. The next year, large silver deposits were uncovered in Mexico. Several other silver-bearing areas were also discovered in Peru. Spanish possessions in these nations accounted for approximately 85% of global silver production in the time between the Conquista and these Latin American nations achieving independence in the early 1800s.

Up until the 19th century, most nations were on a silver standard with silver coins forming the main circulating currency. Then, as an after-effect of the Franco-Prussian War and a global supply glut of silver, most nations moved to a Gold Standard. The United States passed the Coinage Act of 1873, which halted production of silver dollars and limited the legal tender amount of smaller silver coins to five dollars. Western mining interests then forced a series of legislative acts that required the U.S. government to buy silver and mint it into dollars. More such Acts followed all the way into the 1960s which resulted in the US government becoming, in turn, the biggest buyer and seller of silver.

Responding to persistent investor demand for a government-produced silver investment vehicle, Congress authorized the American Eagle bullion coin program. In addition to various sizes of Gold Eagles, a one troy ounce Silver Eagle began production. The American Silver Eagle (ASE) would become the world’s leading silver bullion coin.

DID YOU KNOW?

Until 1965, coins minted in the United States contained 90% silver. Between 1965 and 1969 it dropped to 40%.

Polished silver reflects 95% of the visible light spectrum, which makes it the most reflective metal. Because of that, many mirrors are coated with it. Its reflective properties are also used for objects like telescopes, microscopes, and solar panels.

The word silver comes from the Anglo-Saxon word seolfor, and it is notoriously known as one of the English words with no possible rhyme. Also, the words for ‘silver’ and ‘money’ are the same in fourteen languages.

Silver is good for your health. The phrase “born with a silver spoon in his/her mouth,” implies that a child grew up wealthy. But the idiom originated as a way of saying that the person never seemed to get sick. Because of silver’s germ-killing properties, in the old days, children who were fed with silver spoons (which was a luxury often reserved for wealthier families) were typically healthier babies.

Out of all the elements, silver is the best electrical conductor, and is actually used as the standard by which other conductors are measured. On a scale of 0 to 100, silver ranks 100 in terms of electrical conductivity. Copper ranks 97 and gold ranks 76.

Silver can make it rain. The compound silver iodide has been used for cloud seeding, to cause clouds to produce rain and try to control hurricanes.

THERE ARE MANY REASONS TO BUY SILVER

Sustained Demand: Demand for physical silver is rising among private investors, hedge funds, central banks and governments.
Scarcity: According to research, the timing estimate range for peak silver production is narrow, in the range 2027–2038, with the best estimate in 2034. By 2240, all silver mines will be nearly empty and exhausted.
Privacy: Your silver purchase information is not shared with any private or public entity. What you do with your silver is your business alone.
Diversification: Silver prices fluctuate in patterns that often run counter to other markets, making silver an ideal choice when seeking additional diversification.
Hedge Against Inflation and Recession: Precious metals can help preserve your purchasing power over time, especially during periods of high inflation or during a recession.
ETFs vs Physical Silver: ETFs are still vulnerable to market fluctuation and system collapse. Experts recommend buying silver-bullion either in coins or small bars for keeping in a safe deposit box.