Superior Silver

The Silver Lining

Supply & Demand

Surprisingly, less silver is available than gold. While gold is more rare below ground, there are far fewer ounces of silver available above the ground. Silver is getting used up faster than it is being mined. New deposits are not being located and surplus continues to decrease to meet demand. Silver is used in industries at a greater rate than any other precious metal. More than half of the demand for silver is used for industrial purposes, and of that amount 30% is thrown away.

It is hard to imagine we throw away a precious metal that is necessary for everyday use. Of all chemical elements, silver has the most powerful antibacterial properties with the least toxicity thus increasing its use in the medical industry. Silver takes the lead in electrical and thermal conductivity. It has sensitivity to light and is the most reflective of all the metals. As technology advances so does the need for silver. It seems inevitable that these factors among many others will drive up the price of silver.

Truth & Trends

For over 2,500 years silver has been used to store wealth. It was the foundation of most monetary systems before the 20th century. Not long ago currencies were backed by silver. In fact, if you take a look at a pre 1971 dollar bill you will see it was printed as a ‘silver certificate’ that could be exchanged for physical silver. Today currency is printed as ‘federal notes’ backed by nothing, thus having no accountability to the expansion of supply. More currency has been printed (or expanded by digital means) in the last couple of years than the previous 100 years combined. This is where inflation comes from. If you expand the currency supply, prices will rise. We see this today when purchasing basic goods and services such as groceries.

For much of history, it took roughly 16 ounces of silver to buy 1 ounce of gold. Recently, it takes 60 ounces of silver to buy 1 ounce of gold. This ratio change indicates that prices are likely artificially influenced. Whatever the cause, eventually the ratio will balance itself, as it always does. Once this happens, history has shown that gold and silver will meet or exceed the value of all currency in circulation.

Time to Shine

The idea of silver being an investment is a modern understanding. Typically, this metal was thought only to be of industrial use; even though for thousands of years it has been used as money. Many factors contribute to the investment qualities of silver. History shows that in a bull market silver will make more dramatic gains. Silver increased 3,105% from 1970 to 1980 while gold increased 2,328%.

A more recent example would be from 2008 to 2011. Silver increased by 448% while gold increased by 166%.  The opposite is true for silver and gold in bear markets where silver will experience more dramatic lows. Every investment comes with risk. Although silver hedges inflation and has great potential for increase, it has higher premiums and greater volatility. Even with this knowledge, precious metal buyers tend to overweigh their purchases heavily into silver.

Spot Price

Spot price is the acknowledged base line for the market pricing of precious metals. This price constantly changes and does not factor in the actual costs associated with acquiring the metal in physical form. When gold is purchased the premium above spot price will reflect the process to mine, melt, mint, insure and ship the metal to the consumer.

Precious metals are sold for spot price which means these costs are not recuperated unless the spot price has exceeded the price paid for metal. This is important to know when acquiring physical precious metals. Spot prices are typically represented in USD however, PGS converts pricing to CAD for our Canadian clients. Bringing gold into your portfolio should be considered for mid to long term holdings to mitigate risk and capture investment potential.