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About Silver (SI)
Silver has played many roles throughout history. Silver was originally
known as the "poor man’s gold" and used as a cheaper
alternative to gold in jewelry, ornaments, and coins. The United
States, up until 1965, used silver in both coins, as well as making
the dollar fully redeemable in silver. The 1965 Coinage Act stopped
the use of silver in Quarters, and Dimes, and by 1968 the United
States Dollar was no longer tied to silver.
In recent years, the main world demand for silver is no longer
monetary, but industrial. With the growing use of silver in photography
and electronics, industrial demand for silver accounts for roughly
85% of the total demand for silver.
The main supply of silver comes from mine production, scrap operations,
and hoarding. Approximately seventy percent of the silver mined
in the western hemisphere is mined as a by-product of other metal
products, such as gold, copper, nickel, lead, and zinc. As such,
the price of these metals greatly affects the supply of silver
mined in any year. As the price of the other metal products increases,
the increased profit margin to mine operations stimulates greater
production of the other metals, and as a result the production
of silver increases in tandem.
Silver is also mined directly. This is an important but smaller
percent of the total production of silver each year. Silver coming
directly from silver mining operations accounts for approximately
20% of the silver mined each year. A fair amount of silver is
made available each year from such various sources as private
sources, Government stockpiles, and silver particle reclamation
coming from the processing of used chemicals and photography equipment.
Mexico is the world’s leading producer of silver, followed
by Peru, Canada, the United States, and Australia.
Political uncertainty in Mexico may play a major role in the
production of Silver this year. The organization of labor in Mexico,
coupled with small peasant insurrections may cut down on mining
and lead to a scarcity of supply.
Silver is used extensively for industrial purposes due to its
unique properties, such as high electrical and thermal conductivity,
malleability, ductility, and its resistance to corrosion. The
electronics and photography industries are the main consumers
of silver, as silver is an integral component in most electronic
equipment, as well as film and film processing chemicals.
Industrial uses of silver account for nearly 90% of the total
use of silver in recent history, with the remaining 10% being
used for coinage and jewelry. Silver is used heavily in the photographic
industry in all areas from actual film used in cameras, to plates,
sensitized paper, as well as in all photocopying machines and
most fax machines. Silver is also in high demand from basic industry.
Almost every on/off switch used in electrical equipment and appliances
uses silver as a component. Silver is also used in solder and
brazing alloy to join metallic surfaces, as well as in electro
plate and sterling production.
Other substances, such as gold, platinum, aluminum, and rhodium
can be used as substitutes for silver. But most of the substitutable
products are more expensive than silver and offer inferior performance
for industrial purposes.
The main consumer countries for silver are the United States,
which is the world’s largest consumer of silver, followed
by Canada, Mexico, the United Kingdom, France, Germany, Italy,
Japan and India. The main factors affecting these countries demand
for silver are macro economic factors such as Gross Domestic Product
growth, Industrial Production, income levels, and a whole host
of other financial macro economic indicators.
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