Diminishing Supply of silver
At the beginning of the 20th century, there was approximately 12 billion oz of silver globally, which dropped to 2.2 billion ounces in 1990. By 2007, 300M ounces of refined silver remained.
95% of silver got used in the medical field, technology, photography, electronic, and defense industries globally.
There is very little silver circulating in the global market. The prices will keep going up.
Fifteen years extending back from 2007, the silver mined has not been able to keep up with the demand. The government stockpiles and inventories had been dealing with some of the needs, preventing rising prices on the commodity.
Silver sales are going down around the world in places like India, Russia, and China. Because of the inelasticity of the nature of the provision of silver, it does not follow that when the prices of the metal rise, then supply will increase.
A lot of silver mined comes from base metals. Those who mine the base metals will not suddenly start supplying more nickel, copper, lead, zinc, or other base metals to boost production.
Mines for pure silver are few. Because the furnishing of silver is rigid, once the price of silver starts rising, there will be no sudden expectation of a surge in the precious metal quantity. It is inelastic in provision and demand, regardless of the pricing. That is rare in any economy.
Silver was useful in international trade and could be making a comeback.
Silver was the main thing used during the trade for centuries. In North Africa and the Middle East, silver got used while conducting businesses in the nineteenth century.
Arab merchants used a specific form of a silver trading coin, called the Maria Theresa Thaler, dominant in the Habsburg Empire, which was in Austria-Hungary. In German, a Thaler is a dollar.
Western countries had dollars of silver for trading, which they supplied to the East. From the 1800s to the start of the 1900s, China got many big silver coins.
The eight reales or Spanish silver dollars were used while doing business and remained a legal tender in the USA way past the Civil War.
During the reign of the British Empire, 92.5% pure silver, also known as sterling silver, was used. The sterling pound, money used in Britain, got its name from there. During WWI, Indian colonial subjects got paid using silver by the British.
The British had to source $270M made of silver from the USA as the Indians could not accept anything else but gold or silver. These are a few examples showing silver as a popular choice for international trade. It is more valuable now that its quantity has gone down.
In the USA, silver is slowly being brought back as legal tender. It is a requirement to be complied with in their constitution. A few states have already made it legal, and people can use it in place of money during transactions.
This move will see owners of these precious metals (gold and silver) not getting taxed when appreciation occurs. Currencies do not get taxed.
Silver prices are rising globally because of the expanding solar energy industry.
In the 13th Five-Year Plan by China, they planned to increase solar energy accessibility three times the way it was in 2017, by 2020. That is to lessen air pollution in compliance with the Paris Climate Accord.
By then, China had already acquired a panda-shaped 250-acre solar farm. It was the first solar plant of 100 that was in the pipeline for Asia. The solar farm is in Datong. In 25 years, it will have produced the equivalent energy of a million tons of burning coal.
As silver gets into high demand for making solar panels, SolarCity (Tesla) is looking to start using copper, which is much cheaper for its PV panels. Three years ago, the estimates of the silver deposits were 571 thousand tonnes.
According to new research conducted by the University of Kent, solar panel demands have escalated. That has affected the price of silver globally, which is currently rising. They used the London Bullion Market data to conclude. They found out that silver prices went up when solar panels demand increased.
Looming war threats
Generally, whenever the nations see a war situation coming, prices associated with precious metals go up. At such times, many invest in silver and gold. That makes silver a sell currently. The rising silver prices within the year are attracting many buyers to the precious metal.
In recent years, various countries have threatened to go to war with one another due to conflict of interest. The USA has been blaming China for the coronavirus pandemic-related issues.
President Trump and his administration lay the blame on China for the spread of COVID-19. That only adds to many other conflicts that have been brewing below the surface over the years.
China is accusing the USA of racism for directly associating the virus with the Chinese. The virus has been called Kung flu, China virus, and Wuhan virus.
The USA and the World Health Organization also got into a conflict of interest. President Trump accused them of abetting China’s deficiencies by how they responded to the situation when the outbreak started.
Because of this and other instabilities that have arisen between countries concerning the pandemic and other issues, most short-term and medium-term investors are investing in silver. By August 2020, the silver price had reached the highest point in the heights it had gotten to last in 2013.
The precious metal has been rallying since mid-July. Within August, it has moved from selling an ounce of silver at $29, then moving slightly down to $27. That is a high mark after seven years showing a 39% gain since mid-July.
Investing in silver is all about preserving wealth.
The preservation of purchasing power is in the value of that precious metal. It will turn out to be profitable in the long haul as it acts as a way of saving.
Besides, it has liquidity. Liquidity is about how effortlessly and quickly an asset is sold without having any impact on its price. This aspect comes out well when one gets an emergency. Even when the market crashes or any other kind of urgency comes up, you will maintain solvency.