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Why Silver?

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WHY SILVER?

In 1517, the Spanish Empire began a campaign that would set the world afire, and produce unbelievable amounts of Gold and Silver that would drive theories of El Dorado, the legendary city of gold.  While Cortez and the men who followed him would never discover this fabled city, they did discover something nearly as valuable, rich and abundant veins of silver that ran throughout South America.  Huge investments were made by the Spanish Government to build mining colonies aimed at extracting that silver and returning it to Spain.4

It would not be inaccurate to say that silver drove the fever to build the Spanish Empire in South America, of mines in both Mexico and Peru every year.6 6.2 million ounces of silver has been pushed out of these mines in the year to date, with 2.0 million ounces produced in just the past quarter, both exceeding previous projections.  What’s driving such avid production of silver?  The market for silver has been relatively consistent over the past 10 years, with the most notable exception taking place in April of 2011, when the ratio settled in at 31.35.  Throughout the rest of that year the ratio rose back to 50 and today, six years later, sits at a remarkably low (for silver) sitting at a ratio of 75:1.7

All of that may be set to change however.  Photography for example, used to be a major driver of the price of silver, in part due to its heavy use of silver to take advantage of its light-sensitive properties.  With the advent of non-silver based photography, most notably digital photography, that demand has dropped significantly, and much of that silver is being reclaimed through recycling that material to meet demands in other areas.  Technology has continued to have a consistent use for this precious metal, but at the same time it has often found replacements in areas where silver once reigned supreme.
Fickle mistress that it is, technology is precisely what looks to be driving the next major change in silver’s value in the marketplace.  Recent advances and implementation of new technologies have led to an increasing demand, a demand that is set to grow over the next few years.  Consider the field of nanotechnology for instance.  Silver nanoparticles are big business these days in the technology sector, playing important roles in both the fields of medicine and electronics technology.  The conductivity of silver has made it the obvious choice for use in watches, robotics, smartphones, and more, putting it in place to regain its dominance over the currently favored Indium Tin Oxide.

Do you own an Apple Watch? A Fitbit? Android Gear? These lifestyle enhancing tech gadgets all rely on the conductivity of silver and silver nanowires to bring their functions to life.  The same basic elements that allow these devices to track your heart beat and body temperature are also vital in the field of medicine.  Conductive inks, molecular diagnostics, photonic devices, even antimicrobial coatings for textiles are all reliant on silver nanoparticles, and new uses are developed every day.2

Let’s not forget the increasingly popular solar energy sector, the light reactive elements mentioned earlier are a vital component of making solar work.10  Everywhere you look there’s a growing interest in solar power as a way to save homeowners money, to reduce corporations carbon footprint, and even to support the green ideals of places ranging from car parks to grocery stores.  Take a close look the next time you’re cruising down the freeway, many of the traffic signs, speed regulators, and even street lights are all equipped with solar panels, making the Department of Transportation a major consumer of silver and solar technology.

Silver’s current exchange rates are almost as low as they’ve ever been, with 84-1 considered to be one of the extreme outside points it has reached in previous years.  With the new fields of technology rising just around the corner, that means it’s a great time to invest before the ratio starts to shrink again.  Many pundits believe that silver is currently undervalued and could outperform gold soon.

Happy Investing!

Dr. Kal Kotecha

 

  1. https://seekingalpha.com/article/422081-324-years-of-the-gold-to-silver-ratio-and-195-silver
  2. https://www.sbcgold.com/blog/silver-nanoparticles-new-technology-impact-silver-demand/
  3. https://en.wikipedia.org/wiki/Spanish_dollar
  4. https://en.wikipedia.org/wiki/Spanish_conquest_of_the_Aztec_Empire
  5. https://en.wikipedia.org/wiki/Spanish_real
  6. http://www.marketwatch.com/story/fortuna-reports-production-of-20-million-ounces-of-silver-and-13412-ounces-of-gold-for-third-quarter-of-2017-2017-10-16-5160024
  7. http://www.macrotrends.net/1441/gold-to-silver-ratio
  8. https://www.sbcgold.com/investing-101/10-factors-influence-silver-prices/
  9. http://www.businesstoday.in/magazine/markets/commodities/why-buying-silver-can-me-more-beneficial-than-gold-this-dhanteras/story/261817.html
  10. https://www.usatoday.com/story/money/markets/2014/08/29/no-silver-no-solar/14756397/

 

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