Whenever someone is looking to invest in a particular commodity the question one should pose is, "Why is this valuable?" Follow up questions related to the matter should be, "Will this remain valuable," "What is the demand," "Will it climb in price," and of course "Will this suit my investment goals?" This article is designed to answer these important questions and should serve to be a general outline anytime you decide to invest in something.
First an foremost, what is Silver?
Silver (Ag) is a metal that is a naturally occurring element considered exceptionally rare. The Atomic number and position on the periodic table is 47. This element and the unique characteristics include its ductile and malleability properties. In fact, it has the highest electrical conductivity of any metal found on the planet. World production of Silver annually is about 17 tonnes 75% of which is through recycling of industrial goods such as cell phones and computers. The other 25% comes from Silver mining operations.
Why is Silver Valuable?
Silver (XAG 961) is actually considered a currency under ISO 4217. (International Organization for Standardization.) Meaning the international community has placed an intrinsic value on the metal with consideration to its rarity and usefulness. It is traded around the world just as other popular currencies such as the U.S. Dollar, Chinese Yuan, and the European Unions Euro. The difference is Silver has been traded for 1,000's of years before the aforementioned currencies. In fact, Silver translates to Money in many different languages.
Beyond the rarity of this element on earth, its current use in industrial applications is exponential, this being an on-going force, driving it's value higher each year. Here is a look at some historical price points with notable industrial and political interventions that drove these prices Silver. (Dollars in modern equivalencies)
- 1930 - Silver traded at $5.50. | Stock Market Crash (1929)
In this time just like today, Silver was being used in Medicine. It was discovered that Silver actually contains antibacterial properties!
- 1933 - Silver Traded at $6.50 | Executive Order 6102 (1933)
President Franklin D. Roosevelt passes Executive Order 6102 which forbade "the hoarding of Gold coin, Gold bullion and Gold certificates within the continental United States."
- 1934 - Silver Traded at $11.50 | Executive Order 6184 (1934)
President Franklin D. Roosevelt passes Executive Order 6184 which implemented the seizure of all silver situated in the continental United States. Exempt was that of U.S. and Foreign minted coins.
- 1975 - Silver Traded at $20.00 | P.L. 93-373 (1974)
President Ford's administration passes Public Law 93-373 legalizing the purchase, possession and trading of precious metals under the guise that it would no longer "adversely affect the United State's International monetary position."
- 1980 - Silver traded at $110.00 | Silver Thursday (1980)
Hunt Brothers become the richest men on the planet with an estimated $16 billion dollars buying and hoarding the majority of the worlds Silver. Thus, adversely affecting the United State's financial system and causing a myriad of lawsuits and causing outrage by companies such as Tiffany & Co and Kodak which deals in Jewelry and at the time Silver halide Photography. Also sending Americans into a frenzy searching for pre-1965 coins to melt down for silver, as well as a spike in burglaries and theft of silver coins and jewelry. The ultimate cause being the actions of the Hunt Brothers in buying up the available commodity causing an artificial shortage.
- 2000 - Silver Traded at $7.00 | The Smart Phone
- 2017 - Silver Traded at $17.00 | Industrial use increasing exponentially.
From 2000-2017 Smart Phones and the ownership of similar devices such as laptops and tablets means an extreme increase in Precious Metal usage. An iPhone 5 from Apple, for instance, contains roughly $0.35 of Silver and a whopping $1.50 of Gold. Doesn't sound like much, but considering over a billion iPhone's have been manufactured since their inception in 2007, not to mention the various other manufacturers like Samsung and LG.
Will Silver remain valuable? Will it climb in price?
The possibility of Governmental intervention, powerful and wealthy men and corporations causing artificial shortages and another invention of a precious metal heavy product are likely but uncertain. The certainty of the device you read this on being here to stay may, however, be a safe bet. There is truly no way to tell the future of Silver but with a track record of outperforming the Dow Jones Industrial Average since the turn of the century and it's usage becoming exponential in industry it may be a safe bet.
Will Silver be good for my investment goals?
This is a question you must answer on your own. I hope you liked our article, please comment your opinions on the matter and stay tuned for more articles like this one!