I have always thought, and continue to think, that silver is a more difficult precious metal to 'figure out' than is gold. This is because:
-
approximately 70% of all new silver mined results as a by-product from the mining of based metals and other precious metals;
-
as I see things there has to be a relationship between the macro-economy and the mining of base metals, such that the macro-economic condition as it varies over time has to affect the the demand for, and hence the by-product supply of, physical silver over time.
That said, you might want to read a recent article that broadly discusses the build-up of silver usage in industrial applications including:
-
anti-bacterial, appliance, catalytic, clothing, consumer electronics to list but a few such applications; and,
-
increasing uses of physical silver in energy, food and water applications.
We are facing declining rates of growth in the developed and developing economies, which as I see things the financial markets currently seem to broadly be disregarding. Declining rates of economic growth suggest serious economic headwinds going forward.
It seems to me that it may very well follow that even in a poor macro-economy:
-
given the nature of the current and prospective uses of silver in industrial applications, silver demand generated by those applications may not drop in direct relationship to a decline in the rate of economic growth; and
-
mining costs related to permitting delays, infrastructure costs (both external to mines, and specific to them), and mine operating and closure costs are all likely to continue to increase. In turn these things may negatively impact the future supply of newly mined silver,
and if one or both of those things prove to be the case, all other things equal that may push the price of silver higher over time.
If that is how things transpire, owning physical silver not just as a 'safe haven' hedge, but as long-term investment, may be becoming increasingly sensible. I suggest you talk that over with your financial advisor.
For a comparative quick overview of silver's industrial uses, I suggest you read Silver's Industrial Use: The Best Is Yet To Come.
Topical Reference: Silver's Industrial Use: The Best Is Yet To Come, from Financial Sense, Ryan Jordan, March 8, 2013 - reading time 4 minutes. Also read:
-
Silver Industrial Demand To Hit Record High In 2014, According to Silver Institute Report By Thomson Reuters GFMS, from International Business Times, Mike Obel, January 4, 2013 - reading time 2 minutes; and,
-
Silver as a By-Product No Joke for SLW, from The Motley Fool, April 12, 2012 - reading time 2 minutes.
