Is Silver More Precious Than Gold?
Silver has been a valuable commodity for 5,000 years since the very first silver mining endeavor in Anatolia (present day Turkey) in 3000 B.C. The majority of silver production shifted continents until Bolivia, Peru, and Mexico earned that top spot between the 16th and 19th centuries with the discovery of the New World. In the late 1850s, silver mining was born in the United States with the discovery of the Comstock Lode in Nevada, and more discoveries all over the world followed in the years to come.
The voracious appetite for the shiny metal has only increased over the centuries. From silver utensils to works of art, people have always loved the beauty and luster of a polished piece of silver. In 14th century England, silver was highly valued, and it is English royalty we have to thank for the sterling silver standard. In 1300, King Edward I ordered that all items made of silver meet the standard of 92.5% pure silver, calling it the sterling silver standard. The term, “sterling” allegedly derives from “starling,” which is the name for the silver English penny and also middle English for “Little Star.” Furthermore, the famous Bayeux Tapestry portrays Halley’s Comet streaming across the sky in scene 33 just before the Battle of Hastings. William the Conquerer seized the throne of England in that battle, and star symbols were stamped on all silver currency he produced because of the good omen streaming across the sky that night.
Silver has played an important role in our history, and today, that role is just as important—if not more so. Unfortunately, the abundance of silver that the people of Earth have enjoyed for the last 5,000 years won’t last forever. As demand increases, so must production, but how much longer can we continue in this ever-increasing consumption of the precious metal?
Silver has been overshadowed by the beauty and popularity of gold for thousands of years, but research shows that our view of silver as “second best” may not be entirely accurate. It may not be as pretty as gold, but silver holds more value than you might think. One reason for that is simple: supply and demand. According to gold and silver expert Ted Butler, more silver was consumed than was mined until 2006, and another deficit seems to be on the horizon. Reasons for that include pricey, complex mining procedures, price manipulation, and growing demand.
The amount of silver yet to be mined may not necessarily be low, but the complexity of extracting that silver makes for increasingly expensive and difficult mining processes. In short, un-mined silver cannot be produced at a rate fast enough to keep up with demand. Silver-Coin-Investor.com reports, “The depletion of thousands of years of accumulated silver inventory has resulted in rarity and scarcity of above-ground silver available for small investors.” Furthermore, pure silver mines only produce about 35% of silver supply. Gold, copper, zinc, and lead mines produce the rest as a by-product, along with the ever-decreasing amount of recycled scrap silver.
If you only looked at silver prices today, you would assume the silver supply was abundant, but the truth is that the market cap for gold is much higher than it is for silver. In reality, the price of silver ought to be higher than it currently is, and it even has the potential to exceed the current price of gold! Yet, silver still sells for only about $20 an ounce.
“Price manipulation is the most serious market crime possible under commodity laws,” says Ted Butler. Big traders like JPMorgan Chase & Co. have been culprits in this scheme, and it’s a huge factor in the lopsided supply and demand scale. With an unreasonably low price tag on silver, the precious metal is consumed faster than it can possibly be produced. Something has to give sooner or later, and one day that price tag won’t be able to stand at $20 an ounce.
As demand increases, the price of silver will have to increase as well. And demand is increasing—not just for investments, but also for industry. According to The Silver Institute, “silver is an essential component in nearly every industry.” In a Daily Reckoning article from 2011, Jeff Clark discusses the rapidly increasing demand for industrial silver, highlighting 3 major industrial usages.
“Since 1999, consumption in electronics has increased 120%,” Clark states. “Silver use in solar panels began in 2000, and usage is up 640% since. Silver was first used in biocides (antibacterial agents) in 2002 and, while still a small percentage of total silver use, it has grown six-fold. Taken together, these three industrial uses of silver are consuming about half of all the silver mined each year!”
He goes on to cite Silver Institute predictions that “total industrial use of silver will rise by 36% over the next 5 years.” Silver trumps gold in the industrial world, because gold is used in very few industries, and as stated by Ted Butler, “does not have a dual demand aspect” like silver does. In other words, gold is mostly consumed by investors while silver is consumed by investors and industry. Can silver producers keep up with such an increase in demand? Not likely.
What is likely is a huge increase in silver prices. As stated before, silver has great potential to exceed the current price of gold, which is hovering around $1,300 an ounce! Do not hesitate. Stock up on silver before it’s out of your price range. Buy today, and reap the benefits tomorrow.