Why Buy Silver - Silver Coins - Silver Bullion | Goldco Direct

Why Silver

Though precise figures are up for debate, it is well known that the Spanish Conquistadors brought back many tons of gold from the Americas. And, while early years resulted in sparse amounts, by the mid-1530s annual gold shipping to Spain began to mount.

What we don’t hear much about was the incredible amount of silver shipped from the Americas to Spain. The decade of the 1550s was the peak of Spanish gold transported, resulting in 47 tons total. However, silver shipment increased every decade, from the first trickles in the 1530s to the massive 2985 tons shipped in the 1590s. Spain amassed great wealth through conquest in the New World.

HIDDEN TREASURE

People seem to be just as unaware of silver in today’s markets as they are of 16th century Spanish shipments. Most have some awareness of its use as small denomination currency. And some have knowledge of its industrial and medical use. But very few are truly knowledgeable about its value as a store of wealth.

Though silver has enjoyed a place in monetary as well as jewelry use for millennia, as technology has increased so too has silver’s diversity. Its demands now include photography, electronics, superconductivity, water purification and medical use. Out of a total supply of 1.057 billion ounces (33,000 tons), including scrap and government sales, the major breakdown in silver usage in 2010 is as follows (in millions of ounces).

Use Industrial Photography Jewelry Silverware Coins & Medals Remaining
Ounces Used 487 72 167 50 101 1801

1Implied investment or stockpiling

Seventy percent of the annual silver supply comes from mine production, with 560 million ounces being consumed through industrial use, including photography. This leaves only 176 million ounces for investment. Notice the data above. Silverware, jewelry and coins requires 318 million ounces; a deficit of 142 million ounces annually

With approximately 15% of the estimated 40 billion total tons ever mined consumed in the past decade, it’s estimated that 40% or more of all silver ever mined has been used industrially. How much was consumed in previous decades is difficult to tell.

BOTTOM LINE

There are many formulae that can be used in an effort to estimate the eventual value of silver, particularly in relation to gold. ETFs have increased the paper supply of both, while the actual supply changes little. Central banks often trade in precious metals, causing unnatural swings in price. Furthermore, the current monetary system spurns precious metals as useless relics, in favor of manipulative currencies.

Because of rising demand and diminishing stockpiles, exasperated by current economic turmoil, many financial advisors are recommending silver for precious metals portfolios. It’s already more volatile than gold, with expectations that it could close the gap with gold as narrowly as 5/1 ($400 silver/$2000 gold). As the gold prices rises, becoming less affordable for many, it’s entirely possible that silver will dramatically outperform gold in the coming years.

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