Silver Prices

Silver Price Per Ounce
The price of silver over time.

Why isn’t silver more if not equally as valuable as gold?

There are a multitude of reasons why the price of silver per ounce should be at least in the vicinity of the price of gold. To be quite honest, silver outweighs gold in usage and value in many different instances.

According to Andy Soos, writer for the Environmental News Network, a total of about 5.6 billion ounces of gold have been mined in human history as of 2009. The world consumption of new gold produced is about 50% jewelry, 40% investments, and 10% industry.

Silver on the other hand has about 40 billion ounces mined worldwide since 3000 B.C. according to Silver Insights. 60% is used in industry, 20% in jewelry, 15% photography, and 5% investments. As shown in the representation of applications, gold and silver are used in two completely different ways. And one is more versatile than the other.

Price of Silver Per Ounce

Gold used as jewelry is probably the most popular application of the yellow metal. Because of its shine, color and softness, gold became the most sought after metal to use for jewelry.

The second most used application of gold is investments. Gold in bullion form is the most common way to store the metal. Gold coins and bars are mostly used as an investment to combat any potential fiat currency depreciation or collapse.

In industry, gold isn’t used nearly as much as silver. Gold is applied in electronics, dentistry as well as other medical uses.

Now when it comes to industry, silver is what you call an industrial metal. This means that overall, silver is its most valuable when applied to areas such as batteries, bearings and electronics.

Similar to gold, silver is also used in jewelry. Many times certain pieces will be labeled sterling silver. Sterling silver consists of 92.5% of silver and 7.5% of other metals, usually made up of copper.

Silver application in film photography used to be very popular, but is now being reduced due to the consistently growing use of digital photography.

Silver as an investment is expanding constantly despite the low percentage usage of the past. Many investors believe that the price will steadily rise over the next four years. Writer Ben Kramer-Miller points out that mining companies estimate that the silver reserve outnumber gold reserves by a factor of 10.6. If this figure is true, the price of silver per ounce should rise from its current $20 price range to about $115.

From a historical standpoint, once silver was discovered, it was used more often in daily commerce than gold. Silver as currency was more prevalent versus gold which was used as for much larger payments. Last year the Thomson Reuters produced the World Silver Survey 2013: A Summary for the Silver Institute. The survey is an annual review of the international silver market. The report showed that the demand of silver is much more volatile for silver than gold. However, in particular areas such as industrial and investment intake, the the demand is consistently growing. The price should increase, simply because silver is much more useful in different areas.

Let’s take a side by side comparison of silver and gold’s uses:

Silver Gold
Currency Currency
Investment Investment
Jewelry Jewelry
Medicine Medicine
Industry Industry
Electronics Electronics
Water Purification Food Decoration

The application of silver’s use goes even further than this. But the list shows the most important and valuable uses of each.

From an investment standpoint, Ben Kramer-Miller further elaborates reasons why silver makes for a better choice. He explains that 400 tonnes of gold is applied towards industrial production, while silver’s application comes in at over 14,000 tonnes. Silver is included in almost every single electronic device used today. One of the most difficult aspects of silver’s industrial demand is the difficulty of recycling the white metal. Thus no matter what the amount may currently be left in the earth, we are unable to recover much of what is used. One additional gem in the world of silver investments is the amount that you can get for your money in comparison to gold. Kramer-Miller mentions that an investor can walk into a coin shop with $1000 and purchase 40 ounces of silver, but that will not get you even 1 ounce of gold. From a psychological point of view, that is much more satisfying.

The value also depends on supply and demand a great deal. Thomson Reuters’ report tallied 2013’s global silver mine production grew by 4%. Mine production increased in its overall silver supply from 2/3 to 3/4. Silver supply is made up of other additional components such as scrapping and government sales to name a few. As stated before, recovering silver from industrial products is the most difficult and unrecoverable. In an article written by Theodore Butler, he states that “approximately 700 tons of silver are in continuous use in the world’s chemical industry for the production of plastics.” Furthermore, he says something more meaningful than any argument can make, “Here we have a vital material, known to all men for all time, literally disappearing before our eyes, both above and below ground. It is a material upon which modern life and rising standards of living are dependent. It is beyond indispensable, it is a miracle metal.”

Lastly, Butler explains as the demand for silver rises, the price of silver per ounce will definitely see an increase. There is a huge discrepancy between paper silver versus physical silver. Paper silver such as bank certificates are held as assurance that this silver exists, but what if each and every investor comes to collect? Butler estimates that over a billion ounces of silver are currently held in paper form. Do we have enough above ground and/or available.