Why Silver

Silver has been used since ancient times as a store of value and currency. While today, this precious metal is still used as money, it has many more uses which demonstrate its usefulness in our modern society.

Silver, chemical symbol Ag, has an atomic number of 47. It is highly lusterous and malleable. Silver also has the highest electrical conductivity of any element and highest thermal conductivity of any metal. In fact, one of the fun methods of determining whether a coin or bar is really silver is to place an ice cube on it. The ice cube will start melting right away because of this thermal conductivity. For these reasons, silver is an extremely important industrial metal.

Silver’s earliest use may have been as a form of currency. It is thought that in around 700 BC, the Lydians used a silver-gold alloy called electrum to coin money. Since that

Silver bars and bags
Money on the table

time, silver has been used as a store of value. Many modern coins were also minted in silver. The Pound Sterling was based on the value of silver. In 1964, the United States ceased using silver in circulating coinage. Until 1970, some coins were minted and circulated that contained 40% silver. Today, the only coins that the US mint produces that are silver are commemorative types and investment grade coins like Silver Eagles.

So, why should you consider owning silver?

Silver holds its value better than most currencies. Fiat currencies, like the Dollar, Euro, Ruble, Dinar, and Yen have depreciated over time as more and more is printed. But, compare what $5.00 would buy in the grocery store today with what it would buy 30 years ago. At 2.8% annual inflation, you would need $11.50 today to have $5 of 1984 value. (Inflation for necessities like food has run even higher than this rate). Now compare silver’s value 30 years ago today. $5 dollars spent on the metal in 1985 (about 1 ounce) will buy you $16 worth of groceries today.

The fact that silver will store value, is portable, and has uses beyond simple storage, means that it is more like real money rather than a fiat currency. There are countless places to buy and sell silver from your local coins shop to Ebay. Furthermore, in some states like Utah, silver is considered legal tender.

Silver is a great way to diversify your investments.

Generally speaking, when the economy falters, silver and gold prices rise. These precious metals are seen as a “safe haven.” Furthermore, when interest rates decrease, and people begin to worry about high inflation, prices go up because again, they are seen as a safe haven. Prices go up because of demand. But silver also has a couple of advantages over gold.

First, in addition to its investment demand, and demand in jewelry, silver has a high industrial demand. It is a key component in electronics, computers, your smart phone and tablets, dentistry, coatings, construction, and automobiles. And while the demand for silver in the photography industry has waned over the past decade, it is more than made up for in touch screen components, batteries, and the solar industry. What hotter manufacturing areas are there than batteries for devices and cars like he Tesla models and solar panels?

Perhaps a hotter industry is biotech. Here silver also shines! It is used in coatings, delivery devices, medical instruments, and as an anti-bacterial. It has even been integrated into clothing for power generation for mobile devices as well as fighting odor caused by bacteria.

Silver is truly ubiquitous and much of our modern conveniences owe their existence to silver.

However, because silver is used in such small quantities per device, most of it ends up in the land fill or is completely consumed in contrast to gold which has a robust recycling industry. There are fewer and fewer high quality sources, easy to mine Ag left on the planet. And as global demand increases for both investment and industrial application of silver in places like India and China, industries ability to meet that demand decreases.

In fact, it has been estimated that the world has operated at a silver deficit over the past few years. That is, the supply coming from mines has not kept up with increasing demand. There are some who worry about how much physical silver actually still exists at COMEX and other storage facilities. If it turns out that it is really in such short supply, be on the lookout for much higher prices in the near future.

The good news is that there are many ways to invest in silver right now.

One of the reasons people are so excited about silver is because it is like a “poor man’s gold” in that it is much more accessible than gold for most people.
Right now silver trades for about 1/76 of gold. That is the margin of silver to gold is 76 ounces to 1. During the bi-metalism era, the ratio was 16 to 1.  In 1980, the ratio was 17 to 1. 1991, the ratio was 100 to one (when silver was at its low). And in 2007, the ratio was 51 to 1. In ancient times the ratio was 12 – 15 to 1. The US geological survey recently concluded that silver is 17.5 times more prevalent than gold in the earth’s crust.

Canadian Silver Coins
Canadian Silver

So what does this all mean?

Well, it appears that right now, silver may be inexpensive compared to gold. If both metals were used the same way, that would be one thing. However, because silver is 1. Being consumed (not recycled) 2. Has both jewelry, investment, and exploding industrial demand and, 3. Is pretty inexpensive compared to gold; it may be a good time to invest. Furthermore, because silver is so inexpensive, one can start out in small increments compared to gold.

Silver and gold are easier to buy than ever before. SilverExchange.com has numerous business listings for coin dealers, jewelry stores, and gold and silver dealers who will buy and sell precious metals. We also have reviews of popular online gold and silver dealers. You can see current and historical prices on our charts. Soon, we will have calculators and other tools to help you. If you are in the gold or silver industry, whether miner, refiner, wholesaler, retailer of coins, bullion or jewelry, we encourage you to add your listing to our database. Its free and great exposure for your business!

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