silver – from the very beginning, silver and gold have displaced all other mediums of exchange

Throughout history, many different articles have been used as forms of money; such as stones, salt, shells and beads. From the beginning, silver and gold have displaced all other mediums of exchange. The invention of the printing press enabled the use of paper currency along with it. However, no government has ever successfully substituted paper for real money, because no government can print silver.

In general, silver prices are anticipatory rather than reactionary. Once the forces of the inflation index begin to cause a shift, investors will buy into the market to make sure they are in position before the general public. Their buying will drive prices upward.

Silver Supply:

For many years, the world has used more silver than it has produced, yet most people assume that silver is abundant. This was certainly the case before the industrial revolution. Since then, we’ve had a dramatic shift in perception, just as the mainstream investor begins to catch on. Currently, the amount of silver mined each year is far less than the amount used. Industrial users will soon begin to feel the pinch of longer delivery times. When this happens, it will have a positive impact on silver prices.

Demand:

Silver is an industrial commodity. The basic scientific properties of silver make it a candidate for use in an ever-growing variety of devices and applications, from computer chips to solar power generators. Silver is also an antibacterial and antimicrobial agent, a biocide. Common products using silver particles are bandages, linens, clothing and cosmetics. The most widely documented uses are prophylactic treatment of burns and water disinfection. Because silver is an industrial commodity, it is a candidate for an industrial shortage. The world’s industrial consumers hold little in the way of silver inventories, thanks to just-in-time inventory and production practices. New mining production is not stimulated by silver prices. Mining production is fairly fixed because over 70% of silver production comes as a byproduct to other types of mining, such as copper, lead and zinc. The mining industry is simply incapable of keeping up with the current demand for silver. Given that we already have a widespread retail silver shortage, a wholesale shortage is likely as well. When industrial users face delays in silver shipments they will panic and attempt to build inventories all at once.

The Outlook:

In the current financial crisis, there is a profound and very powerful advantage to silver being an industrial commodity. The mainstream has forgotten about silver as a monetary metal. The new generationhas only a fleeting association between silver and value.