Is silver set to shine once more? After a torrid few years, analysts argue rising demand will see this precious metal’s stock rise – but can it survive the coronavirus effect?
First five and top seven
Silver was one of the first five metals (the others being gold, copper, lead and iron), to be discovered and used by humans. It is also one of the so-called ‘seven metals of antiquity’. The earliest silver artefacts date back to 4,000BC.
It doesn’t just look nice
Coveted for centuries as a metal for currency and for jewellery, it’s silver’s physical properties that make it an in-demand element. It exhibits the highest electrical conductivity, thermal conductivity and reflectivity of any metal known to man.
You need to work for it
Silver is mostly found in minerals including argentite and chlorargyrite, making it harder to mine. Most silver is produced as a byproduct of copper, gold, lead, and zinc refining.
Don’t show me the money
The words ‘silver’ and ‘money’ are the same in many languages. But because US half-dollars, quarters and dimes minted up to 1965 contained 90% silver, hoarders created coin shortages, forcing Congress to legislate for the eradication of silver from quarters and dimes, and cutting the silver content of the half-dollar.
Silver’s antimicrobial and germicidal properties have been known since Egyptian times, and are the reason it’s used today in bandages, to treat burn victims and for use in combating dangerous superbugs.
Because silver is so soft and ductile (an ounce of silver can be drawn into a wire 8,000 feet long), sterling silver is 925 parts silver per 1,000 (ie. 92.5% silver). The remainder is an alloy – normally copper.
Expected to rise
Around 600 million [troy] ounces of silver are mined each year, but heavy industry consumes about 870 million ounces a year, leading to reserves being shrunk. Governments now own just under 8% of the world’s silver bullion.
While most of the gold that’s ever been mined still exists today, currently 90% of all silver produced is used once and then thrown away without being repurposed or recycled.
What they say
“What was holding silver back in the past is now helping silver.”
George Gero, managing director, RBC Wealth Management
“Precious metals in particular have experienced high levels of volatility since the pandemic began to unfold last year, and silver has been caught in the storm.”
Charlotte McLeod, Investing News
“We’re flushing millions of tonnes of valuable metal waste down the drain at a time when there is unprecedented strain on the world’s resources and rising commodity prices.”
Chris Oldroyd, MD of metal recovery equipment provider Inprotec
It might be the world’s most reflective metal – but silver has lost its lustre in recent years. Its price has fluctuated wildly – its highest price ($48.70 per ounce) dates back to the 1970s, while its best annual average price ($35.12), was now nearly a decade ago (2011). 2018 was particularly woeful. During a troubled 12 months, silver suffered the double whammy of losing 9% of its value, while the cost of producing it increased by 16%. In June 2019, investment research firm Zacks called the future of silver ‘dismal’.
Before mid-March’s coronavirus-hit markets saw a 6% drop in silver prices, analysts were saying the precious metal’s time could be here again, on the back of growth in the products it is used in: everything from batteries to computer chips. But it’s in solar power (using its thermal and electrical conductivity properties), where its new, shiny future could lie. Only time will tell if the metal will once again prove its ability to bounce back.