Recently I told you about my discussion of precious metals with a professional trader. That's what got my interested. From there I started to research things. Reading, reading, reading. Here's some of what I've learned so far:
- Silver has been recognized as money for close to 4000 years (the English Pound was originally composed of 240 silver pennies, weighing a total of one pound).
- Unlike gold, silver is one of the most versatile industrial metals. While gold is mined and hoarded, silver is consumed.
- In 1980, there were approximately 4 billion oz of silver inventories above ground. In 2007 there were maybe 1 billion.
- Most of the silver which has been consumed (mostly in consumer electronics) is very difficult to recover.
- Historically (400+ years), silver has traded at a ration of about 15:1 with gold. Today it's closer to 50:1.
- There is 4-5 times as much gold in inventory than there is silver.
More to come...
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1 comment:
I've been accumulating silver for just over a year now. An additional point - most silver mined now is a byproduct of base metals, and with the current economic downturn, there will be a lot less new silver entering the market. This suggests to me that its value will rise in the short run. On the other hand, when the economy picks up this trend will likely reverse. This is likely to be offset by inflation, so I don't expect it to greatly lose value; still, I wonder if the historic ratios will ever reappear.
Another factor is the fact that historically, one of the biggest uses of silver has been in photography, but with the advent of widespread digital photography there will be less demand for this purpose. Still, I'm going to continue stacking; I don't think you can go too badly wrong with this stuff. It's best thought of a way of preserving wealth, though, rather than increasing it, I think.
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