Throughout
history, many different things have been used as a form
of money; such as stones, salt, shells and beads. From
the very beginning, silver and gold have displaced all
other mediums of exchange. The invention of the printing
press brought with it paper currency. No government has
ever successfully substituted paper for real money,
because no government can print silver.
Normally,
silver prices are anticipatory rather than reactionary.
Once the forces of the inflation index begin to be felt,
investors will buy into the market to make sure they are
in position before the general public. Their buying will
drive prices upward.
The
Supply
New mining production is not stimulated by silver
prices. Mining production is fairly fixed because over
70 percent of the silver produced is a by product of
copper, lead and zinc. Economists agree that silver
consumption exceeds production, that the shortage is
being supplied from private above ground hoards, and
that the price of silver has risen dramatically as the
result of it. Part of that shortage is made up from
recycling jewelry, film and some electronic parts. The
majority however, is supplied by a diminishing world's
supply of silver.
The
Demand
Silver has chemical and physical properties which are
unique. It is the best conductor of heat, the most
reflective of light and, next to gold, the most
resistant to corrosion. The Technological Revolution has
transformed the metal of coin and art into a metal of
electronics, photography, computers, aerospace and
medicine! Silver is one of the most perfect conductors
of electricity and therefore is considered an industrial
metal besides a monetary metal. Since WWII, an average
of 200 new uses for silver were found each year. If
science and technology continue to progress, it is
reasonable to assume that new uses are yet to be found.
Silver
and Inflation
Fifty years ago you could buy a loaf of bread for a
dime. Today you still can, if it is the same silver
dime. The real value of silver, like gold, hasn't
changed. It never changes, only the currency changes.
During periods of inflation, it takes more dollars to
buy an ounce of silver as the dollar loses its value. It
is said the price of silver goes up, but the value stays
the same. Silver is a store of value and therefore a
protection against inflation. High interest rates tend
to depress silver prices because the silver users
(photo, electronic, jewelers, etc.) find it uneconomical
to tie up money in inventories of silver so they sell
their stockpiles and drive the market down. However,
inflation then becomes a self-correcting factor and it
eventually adjusts itself. As we witness the
deflationary collapse of traditional financial
institutions on the one hand, the destruction of the
dollar's value on the other hand, we are forced to find
somewhere to put our capital for preservation. Silver
will be the subject of tremendous bidding for this
purpose.
The
Outlook
for silver as a long term & short term investment is
excellent. Silver prices must increase as silver users
bid for the metal. For investors who seek a long term
hedge against the declining value of paper currency, as
well as a good average annual profit, the ownership of
silver is a must
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