Guide to silver

Silver

Atomic number 47 in the periodic table (symbol Ag), silver is a uniquely useful precious metal.  The most common (0.07 parts per million in the earth's crust vs. 0.03 for platinum and 0.01 for gold) of the noble metals – meaning it is resistant to corrosion and oxidation.  Silver has been used to store wealth for 5,000 years, and was the foundation coin of most monetary systems before the 20th century.

Industrial silver

Silver has the highest electrical and thermal conductivity of any element, and those properties, plus its relative abundance, mean industry today accounts for the bulk of its annual demand (65% over the last decade).  Leading uses are electrical and electronics, alloys and solders, and also in chemical catalysts, notably ethylene oxide (EO - needed for polyester, solvents, antifreeze, detergents, pharmaceuticals).

Newer uses include photovoltaic cells (although thrifting in solar panel manufacturer has cut the quantity needed per gigawatt by one-third since 2011), and as a biocide (bacteria can't grow on silver) in everything from deodorants to timber preservatives and hospital linen.

Investment silver

Investor interest in silver rose as these modern uses became more commonly known a decade ago, but really took off when the financial crisis hit in 2007.  As a proportion of world end-user demand, investment grew from 5% to above 22% in 2013.  Prices soared to 30-year highs in 2011 as claims of global supply shortages also took hold.  But hitting almost $50 per ounce – a 10-fold gain from only 8 years before – silver drew out a flood of scrap recycling.  Historically the all-time high of $49.45 per ounce was hit in January 1980 when Texan oil barons the Hunt brothers famously tried to corner the market, hoarding silver as a hedge against inflation.

Because silver is primarily an industrial metal, its price can move more in line with copper over the medium term.  But its strongest daily correlation is always with gold, they’ve moved in opposite directions on fewer than 25% of all trading days since 1968.

How can ordinary people buy investment silver?  Silver ETFs have proven popular with private investors, holding shares in a trust fund which then stores metal at a bank, typically in London.  Smaller bar and silver coins have also grown sharply in demand since the financial crisis, now accounting for one-fifth of end-user demand.  But dealing spreads can be wide (10% bid-ask), and sales tax applies in many countries.  Private investors can avoid these costs, but still own physical metal outright, using services like BullionVault.  Users choose to buy, own and trade in London, Singapore, Toronto or Zurich.  There’s a monthly storage charge of 0.04% by value (min. $8) and dealing fees are a maximum of 0.5%.  There is no VAT or sales tax to pay unless and until you opt to withdraw your metal from the vault.

Open a BullionVault account  and claim your 4 FREE grams of silver. It's ready and waiting for you in a professional market vault in Zurich to enable you to test BullionVault.

Please Note: This analysis is published to inform your thinking, not lead it. Previous price trends are no guarantee of future performance. Before investing in any asset, you should seek financial advice if unsure about its suitability to your personal circumstances.

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