Silver is a precious metal used for a variety of things, including jewellery, coins, electronics, photography, and silverware. The photography industry is using less silver nowadays since so many people have switched to digital cameras.
Silver has the highest electrical conductivity of any metal, which makes it sought after by the electronics industry.
Back in the early 1980s, the price of silver peaked and the spot price exceeded 20 USD per troy ounce. In the 1990s, the price of silver fell, and it would take quite some time for it to come up again. By 2014, the price was around $19 per troy ounce for the year, and in 2020 the price exceeded $20.
Today, a lot of the silver production is a byrpoduct from mines where the primary focus is actually zinc, copper or gold.
For the year 2019, the global silver production was circa 27,000 metric tons, and that number had been decreasing for several years in a row.
The top-ten silver producing countries for 2019 were:
- Mexico – 6,120 tons
- Peru – 4,160 tons
- China – 3,570 tons
- Russia – 2,100 tons
- Poland – 1,470 tons
- Chile – 1,370 tons
- Bolivia – 1,190 tons
- Australia – 1,220 tons
- Argentina – 1,020 tons
- United States – 930 tons
On the top-10 list, Peru, Mexico and Indonesia were the countries that had seen the largest decline in silver production during the last four years. Some countries actually increased their production during the same period, including Argentina, Australia, and the USA.
Investing in silver
It is possible to get exposure to the silver price in several different ways. You can for instance purchase and own physical silver bullion, buy stocks in companies in the silver mining industry, or invest in an exchange-traded fund (ETF) that tracks the silver price.
Investors will usually not stroll down to the local jewellry store or flea market and pick up a few neclaces and silver spoons when they want to increase their exposure to the silver price. Instead, silver bullion is bought and sold on commodity markets. Examples of cities home to huge commodity markets for precious metals are Tokoy and London.
There are vendors available who sell silver coins and silver bars to small-scale investors. For larger silver investments, this is usually not a feasable solution, as transporting, storing and insuring physical silver comes with considerable costs that will eat into your investment.
In the United States, collecting old U.S. silver coins is quite popular. United States one dollar, half dollar, 25 cents (quarter), and 10 cent (dime) coins with a date of 1964 or earlier contain 90% silver. The U.S. government stopped using silver in its coins after 1964.
Silver ETF:s can track the price of silver in various ways. Some own physical silver, while others use silver futures contracts.
Exchange-traded funds have their shares listed on an exchange, so buying and selling the shares is easy, and there is usually plenty of liquidity in the system.
Good to know
- The price of silver has a tendency to rise when the USD weakens.
- Increased inflation can make investors look for “safe havens”, and some consider silver a safe haven when the value of cash is dropping.
Silver has been mined for thousands of years, and there were silver mines in Anatolia as early as 3,000 BCE. During the era of the Roman Empire, silver mines in Spain were very important for the imperial economy. In the years 1000 CE – 1500 CE, silver production increased in Europe thanks to improved technology and the opening of more mines. During the Age of Sail, the search for silver and silver mines around the world was a major driving force behind the expeditions.
By the end of the 1800s, over 120 million troy ounces of silver was produced every year, partly thanks to the silver mines in the United States. The first major discovery of silver ore in the United States was the Comstock Lode, which is located under the eastern slope of Mt. Davidson in the Virginia Range, and the silver extracted there would come to have a major impact on the development of the city San Francisco and the state of Nevada. It would also lead to advances in mining technology, such as the Washoe process and square set timbering.