Silver - Real Money and Protector of Wealth

Silver has served as money throughout history


Silver has been used as money throughout the ages. The book of Genesis reports that it was used by Abraham and his contemporaries back in the second millennium BC. Even in more recent times, US dimes and quarters minted until 1965 consisted of 90% silver. By then the silver contained in change coins began to be worth more than their respective nominal values. The silver part began therefore to be replaced by base metals. When the US dollar was unpegged from the gold standard in 1971 the discrepancy between the value of real money (precious metals) and the fiat currency widened further. Today a Mercury silver dime is worth 1,50 USD. Understandably, this so-called junk silver nowadays is traded for more than change.

American Silver Eagle (reverse)

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Silver - a hedge against inflation


Precious metals like gold and silver have been rightly hailed as a hedge against inflation. While the money supply of fiat currencies is totally the whim of central banks and politicians, the amount of real money is limited by the natural scarcity of the precious metal. In times of inflationary monetary policies (quantitative easing) and sovereign debt defaults investors are turning to physical assets with inherent value. That is why, aside from stocks and real estate, precious metals should be part of any investment portfolio.

Buy precious metals when prices are low


In 2013 the price of gold and silver has, admittedly, sharply declined. After a decade long rally a correction was somehow overdue, but this should not distract from the strong fundamentals in favor of precious metals. Psychologically people tend not to buy when prices are declining, but that's exactly where the opportunities lie to make big money!

Silver - money of the common people


Gold has traditionally been the money of kings and silver the money of the people. At current price levels (gold 1.300 USD/oz, silver 20 USD/oz) both metals are excellent investment opportunities. While gold comes primarily to mind as a protector of wealth the opportunities of silver should not be overlooked. Silver combines the monetary benefit of gold (i.e. its inherent value) with the advantages of an industrial metal that is actually consumed.

The Silver price in USD

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No silver, no mobile phones

At the current price of silver (as of August 2014) about 30 cents of silver are used in a smart phone. Expect prices to rise before recycling your phone will be worthwile
At the current price of silver (as of August 2014) about 30 cents of silver are used in a smart phone. Expect prices to rise before recycling your phone will be worthwile | Source

Industrial applications of silver


While's silver use in photography is fading out, it's unique physical and chemical properties (silver is both the best electrical and thermal conductor) make it imperative for a huge variety of high-tech applications. Among others, silver is found ubiquitously in computers and cell phones. Newer and increasingly relevant applications for silver include solid-state lighting (SSL), radio-frequency identification chips (RFID), solar panels and silver-zinc batteries. So-called nano silver is furthermore used as an anti-bacterial agent. All applications with promising growth prospects and for which silver is indispensable!

In 2013 record silver sales


Although the price of silver may be going through its ups and downs, professional investors have already been keeping an eye on the shiny grey metal. US Mint silver sales started to explode with the financial crisis of 2008. While the average silver sales from 2001 to 2007 were about 10 million oz per year, by 2011 sales had increased fourfold to almost 40 million. In 2013, for the first time ever, the US mint ran out of inventory. Anyway, 2013 is likely to mark the all-time high of silver sales.

Solar Panels

No way doing it without silver
No way doing it without silver | Source

Benefits of silver in times of crisis


Global silver demand is also increasing in India and China where precious metals traditionally have been held in high esteem, but where gold has simply become too expensive for many. Silver, on the other hand, is still achievable for the common people and provides a hedge against the debasement of their currency. A debasement often artificially imposed by their politicians to stimulate exports.

Due to its high value to weight ratio gold is ideal to protect huge wealth, while silver is more suitable for daily transactions. As a saying goes 'store your wealth with gold but spend it with silver'. Historically whenever fiat currencies devalue people turn to precious metals. Barter is already on the rise in countries most hit by the debt crisis, like Greece and Spain. In Argentina barter clubs have become commonplace as people try to tackle high inflation. Should a fiat currency collapse, prices will immediately sky-rocket, but a silver coin still buy a grocery bag.

The World's largest Silver Producer (128 million troy ounces in 2010)

The Gold-Silver ratio


Though the big precious metal talk is mainly about gold, the bigger opportunities might lie with silver. Consider that in the earth's crust silver is about 20 times more abundant than gold. That roughly corresponds to the historic gold/silver ratio of 16:1 (when paper money was backed by precious metals). But at the current ratio of 68:1 silver has ample ground to recover against its yellow counterpart. Should the ratio go back to its historic level, a one oz silver coin would be worth 60 USD! Due to the fact that silver is also consumed as in discarded electronics and that global demand is still rising because of emerging markets, the prospect of silver are truly bright! Professional investors are already turning their attention to silver as they are buying about the same amount of silver in value as gold.

Though the big precious metal talk is mainly about gold, the bigger opportunities might lie with silver. Consider that in the earth's crust silver is about 20 times more abundant than gold. That roughly corresponds to the historic gold/silver ratio of 16:1 (when paper money was backed by precious metals). But at the current ratio of 68:1 silver has ample ground to recover against its yellow counterpart. Should the ratio go back to its historic level, a one oz silver coin would be worth 60 USD! Due to the fact that silver is also consumed as in discarded electronics and that global demand is still rising because of emerging markets, the prospect of silver are truly bright! Professional investors are already turning their attention to silver as they are buying about the same amount of silver in value as gold.

Physical Silver Shortage

Demand and the price of Silver is going to rise...

  • in 2013 a shortfall of 260 million oz (silver production 820 million oz / demand 1,08 billion oz) made up by recycled silver and government stockpiles
  • 7 out of the 10 primary silver mines produced less in 2013 than the previous year
  • ore grades have declined 95% according the US Geological Survey
  • Nevada, the silver state, in 2013 produced only 7,4 million troy oz of silver compared to 25 million troy oz in 1997
  • exploration has almost come to a halt as mines find it hard to turn a profit
  • China in 2013 used 35 million oz for solar panels alone compared to less than 1 million 10 years ago
  • 95% of silver is consumed and needs to be replaced (62% industrial applications, 21% jewelry, 12% coins)
  • demand for silver in 2013 rose by 13%
  • shortage in the pysical market has been ignored due to the paper market which currently sells about 100 oz of "paper silver" for every 1 oz of available silver


Invest in Silver and protect your wealth today


To protect your hard earned money invest in silver today. Buy with reputable, larger dealers that usually have better prices and are safer. Buy common products like the American Eagle or the Canadian Maple Leaf. These are normally better priced and more recognizable when used in transactions. Pay attention with commemorative coins that often have a hefty mark-up. Possibly buy in larger orders to reduce shipping costs to a minimum. Take your share of the silver bonanza now!

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