Silver: there is no substitute
Silver may be one of the most useful metals known to man and a hedge against inflation, but the price of silver still has a long way to travel before reaching its peak. From industrial applications to its relative value (meaning silver’s attractiveness measured in terms of risk, liquidity and purchasing power), it’s not difficult to make a cogent argument that the white metallic element remains one of the most undervalued commodities.
Industrial uses of silver are abundant. Ranging from manufacturing, nanotechnology and high-tech, silver is an essential component with countless applications. Its unique elemental properties make it impossible to substitute and its uses span almost every sector of industry. That said, silver prices have yet to reflect the growing number of applications and uses for the precious metal, despite so many fundamentals suggesting the price of silver should rise.
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When silver peaked in 2011, its price didn’t even match the all-time high set in January 1980. Silver is the only major commodity not to have reached a new all-time high during the past 3 years; silver is still cheaper than it was 33 years ago (without being adjusted for inflation). According to some economists and analysts, silver prices are tremendously depressed.
When compared to energy commodities, gold and even stocks, silver remains heavily undervalued. Gold and silver typically trade within a range of 20 to 70 ounces of silver to the price of one ounce of gold. At the time of writing — with the silver spot price at $21.74 per ounce and gold trading at $1,309.50 an ounce — the gold/silver ratio is approximately 1:62 (meaning 62.2 ounces of silver to one ounce of gold). Traders often use this ratio as a gauge to decide when it is best to move from gold to silver or from silver to gold. When the ratio approaches 1:70, investors buy silver and sell gold. When the gold/silver ratio nears 1:20, investors are selling silver to buy gold. This ratio, which has been historically important to both commodity traders and long-term investors alike, suggests that silver is ready for a rally.
Even after rising an exceptional 400+% from its 2003 low (the average silver price in 2003 was $4.85 per ounce), silver is still significantly undervalued when compared to numerous other commodities — setting the stage for an increase in the white metal’s price, regardless of the changes in other commodity prices. Silver has the fundamentals driving dual-demand growth in consumption and also investment.
- Symbol: Ag (from the Latin word for silver, argentums)
- Atomic number: 47
- Number of protons/electrons: 47
- Number of neutrons: 61
- Classification: transition metal
- Crystal structure: face-centered cubic
- Color: gold (just kidding… silver)
- Characteristics: soft, ductile, tarnishes
- Silver is found naturally by itself, as an alloy with gold or in an ore (a rock containing various metals and elements). Silver is often found in copper and lead ores.
- Silver is found in deposits in Canada, Mexico, Peru, Bolivia, Australia, and the United States. Mexico leads the world in silver production, with Peru right behind — while citizens of the United States are the top silver buyers.
- Along with gold and copper, silver is one of the most precious metals.
- Silver is mentioned in the first book of the Bible (Genesis) and many ancient languages have a word for silver. Words for silver and money are the same in at least 14 languages.
- The word silver is from the Anglo-Saxon word seolfor. No other English word rhymes with silver.
- Slag heaps found in Asia Minor indicate that silver was being separated from lead as early as 4,000BC.
- It is estimated that approximately 50 billion ounces of silver have been mined in the world since 3,000BC.
- Silver has been coined to use as money since 700BC.
- In ancient Egypt and Medieval Europe, silver was often more valuable than gold.
- There are four one-ounce silver coins on my desk, used as paperweights.
- Approximately 17 times more silver than gold exists in the world.
- Sterling sliver is the name given to an alloy (combination of metals) that is at least 92.5% (.925) silver by weight. The other 7.5% is made up of other metals, usually copper.
- Because of its ability to take the highest polish, silver has a greater reflectivity than even gold.
- Of all the metals in existence, silver is the best conductor of electricity.
- Silver is harder than gold, but softer than copper.
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