Silver
Once you start looking for silver around you in everyday life, you'll find it everywhere.
It's in your mirror, it's under the keys of your computer, it's in your car, your TV screen, your light switch. Silver is in almost every electronic device, from home to factory to hospital. It's used in soldering and in tableware. The precious metal is also in the solar panels and cloud seeding machines that we'll need to tackle climate change.
With that level of industrial demand, and a limited supply, it's no surprise that silver also has a healthy market as an investment commodity, and - as with gold - there is the opportunity to own the precious metal in the form of securely vaulted bullion bars.
Why is silver so useful?
In short, silver is ductile, malleable and an excellent conductor of heat and electricity.
Silver has long been valued for its ability to be readily worked, and its resistance to the corrosive effects of moisture and oxygen. The sheen of pure silver is due to its electron configuration, which means all visible light is effectively reflected, which is the basis for the metal's shiny, bright colour.
The most common "noble" metal, silver has also been used to store wealth for 5,000 years, and was the foundation coin of most monetary systems before the 20th century.
Silver has been used as currency and in jewellery for millennia. Silver coins were used in Greece in the fifth century BC, and the concept was spread around Europe and Asia with the conquests of Alexander the Great.
Silver demand
Silver has the highest electrical and thermal conductivity of any element, and those properties, plus its relative abundance, mean that industry accounts for the bulk of its current annual demand, with 65% of silver being used for commercial purposes over the last decade.
You can discover some of the leading uses of silver at the bottom of this page, but if you're reading this on an electrical device, it will contain silver. So will your car, your mirrors, your jewellery, and anything that contains solders or bearings or uses a silver membrane switch. Silver is also used in chemical catalysts, notably ethylene oxide, needed in manufacture of polyester, solvents, antifreeze, detergents and pharmaceuticals.
While demand for silver in its 20th century markets of film and traditional photography has declined, new uses of silver have developed, including in photovoltaic cells for solar panels and - because bacteria can't grow on silver - as a biocide in everything from deodorants to timber preservatives to hospital linen.
Between 25% and 40% of industrial silver is consumed in the production of two major silver compounds: silver chloride and silver bromide. Silver oxides serve as the cathodic materials in rechargeable batteries.
Because pure silver recrystallises at room temperature, softening and becoming easier to tarnish, silver alloys such as sterling silver, which is 7.5% copper, are used in tableware ("the family silver"), while coin silver is typically a 9 to 1 silver/copper mix and dental alloys used for cavity fillings are 65-70% silver, with the balance being other metals.
Silver as an investment
As with gold and platinum, an element with such high demand (through industrial use) and a limited supply will present an investment opportunity. And silver coins and silver bars have long been produced as a method of exchange and store of investment.
Like other precious metals and commodities, silver is often used as a hedge against inflation, or to diversify a portfolio. Silver prices have risen five-fold since the turn of the century, but prices can be volatile compared to gold due to a smaller trading market.
Silver market trends
Investor interest in silver increased when the financial crisis hit in 2008, with investment silver growing from 5% to over 22% of silver demand by 2013. While the price of silver fell substantially between 2013 and 2019, the Covid pandemic then led to another surge in value, with the price of silver doubling between March 2020 and August 2020 as investing jumped to become the largest segment of demand.
Despite peaks and troughs, by 2023, during the war in Ukraine, silver was still trading at pandemic levels around $25/ounce, with investors' outlook influenced by both silver's productive consumption and geopolitical factors.
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. The metals have moved in opposite directions on fewer than 25% of all trading days since 1968.
How to buy silver
The biggest marketplace for physical silver and gold is London, where banks, brokers and other financial institutions handle orders from clients across the world, with the quality of metal offered to buy or sell overseen by the London Bullion Market Association (LBMA).
Trading isn't open to private individuals directly but is carried out between larger dealers and financial institutions. Anyone wanting to invest must have a relationship with one of these to access this market. Much of London's silver trading is done 'unallocated', with the client having a credit account with their bank or broker. That market is underpinned by bars of silver bullion stored in secure facilities inside London's M25 orbital motorway.
Silver prices can also be backed to rise or fall through futures or options contracts, with no metal actually involved, as well as Exchange Traded Funds (ETFs). These stock-market shares are 'backed' by a certain quantity of silver held in a specialist vault, but silver ETFs don't give the investor any beneficial ownership of the metal.
Small bar and silver coin investments have also grown sharply in the last decade. However, dealing spreads and commissions in this 'retail' market can be wide, and in many countries, sales tax or VAT applies on the physical delivery of silver. That makes the chance of turning a profit more difficult if you buy silver in this form.
Buying silver more safely and cheaply
Private investors can avoid these costs, but still own physical metal outright, by using services like BullionVault. Investors can choose to buy, own and trade physical silver securely stored and insured in London, Singapore, Toronto or Zurich.
There's an annual storage charge of 0.48% by value billed monthly (min. $8 per month) and dealing fees are a maximum of 0.5% falling to a minimum of 0.05%. There is no VAT or sales tax to pay unless and until you opt to withdraw your metal from the vault.
In addition, BullionVault and its users trade only LBMA-standard bullion bars, giving you access to that wholesale market at the top of the silver bullion supply chain. This saves up to 10% in handling, shipping and retailing costs over silver coins or small investment silver bars.
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.
Where can silver be found?
According to The Silver Institute, the metal was first mined in Anatolia in modern-day Turkey in 3,000 BCE.
Silver is generally found in a combined state in nature, usually in copper or lead mineralization. By 2000 BCE, the mining and smelting of silver-bearing lead ores had begun. Lead ores were smelted to obtain an impure lead-silver alloy, which was then fire refined. The best-known of these ancient mines was the Laurium silver-lead deposit in Greece.
By 100 BCE the centre of silver mining had moved to Spain, supplying the Roman Empire and providing valuable material for trade on the Asian spice routes.
The New World of silver
The discovery of the Americas by Spanish conquistadors saw huge silver deposits becoming available to Western powers. Between 1500 and 1800, Bolivia, Peru and Mexico accounted for over 85 percent of world silver production.
Later, silver mining spread to other countries, most notably the United States with the discovery of the Comstock Lode in Nevada.
Silver-bearing ore was ground and then mixed with salt, roasted copper ore, and mercury. The silver was gradually converted to the elemental state in a very finely divided form, and then dissolved by the mercury.
Few silver ores have silver as their main constituent. Approximately 25 percent of silver produced comes from ores mined for their silver value, while the rest comes from ores that have lead, copper or zinc as their major metallic value.
New silver discoveries in Central and South America, Australia and Europe led to a production increase to 190 million ounces (5,300 tonnes) annually by 1920. A century later, further discoveries worldwide, coupled with new mining techniques, have led to a rise in silver supply to 800 million ounces (22,600 tonnes) annually. About a quarter of this amount comes from silver mines, with the rest being a by-product of refining other metals.
Nine uses of silver
Electronics
If something has an on/off switch, there's probably silver inside it. Silver has the highest electrical conductivity of all metals, and is used in a variety of electronics, from printed circuit boards to TV screens, and as part of buttons for everything from microwave ovens to computer keyboards - there's silver in almost every electronic device you own.
Cars
Electronic components in cars - whether starting the engine, opening windows or adjusting seats, depend on the use of a silver membrane switch.
More than 36 million ounces (1,020 tonnes) of silver are used in automobile manufacture annually, with silver lines also fired into windshields to keep them fog-free, while antifreeze is made using ethylene oxide, a compound made using silver.
Solar panels
Demand within the solar industry is another driver for the silver market in the rush for clean and renewable forms of energy. Commercial solar panels use approximately 20 grams of silver for each cell when converting sunlight into electricity.
Silver powder is turned into a paste, which is loaded onto a silicon wafer. Sunlight strikes the silicon, leading to electrons being set free and the silver - thanks to its properties as an electricity conductor - carrying the electricity for immediate grid use or battery storage.
Medicine
Silver's anti-bacterial properties and non-toxicity have made it an important element in medical usage for centuries. In the pre-antibiotic era, silver ions, which interrupt the ability of bacteria cells to form chemical bonds, were used as a preventative for dysentery, colds and flu.
In more modern times, silver biocides are found in hospital water systems, catheters, and almost every tool in the operating theatre, as well as being used in sutures and dressings to cure wounds, burns and ulcers.
Water purifiers
Silver is found in domestic and industrial water purifiers, preventing bacteria and algae building up in water filters and letting them do their job of getting rid of dangerous chemicals from drinking water. Silver ions are also added to water purification systems in community swimming pools, hospitals, and spas.
Photography
At one time, the photographic process - whether consumer photography, the graphic arts or radiography - was the single largest industrial consumer of silver, using silver nitrate to create light-sensitive halide (silver chloride, silver bromide and silver iodide) crystals during film processing and in camera lenses, not to mention on Hollywood's "silver screen".
In the late 20th century, photographic use accounted for 25% of the entire silver market. While the switch to digital photography has seen this share decline, the still photography used in x-rays and radiography means the sector remains a large consumer of the precious metal.
Cloud seeding
As technology pushes further, some uses of silver may decline, but other new applications are found. In areas where precipitation is low or drought conditions persist, the "weather stimulation" technique of cloud seeding uses silver iodide, dispersing the silver halide crystals into clouds, encouraging freezing nucleation and rainfall.
Jewellery
For millennia, bracelets, rings, necklaces and other items of jewellery have been crafted from sterling silver. The strength, malleability and ductility of silver means it can be shaped into an infinite variety of hard-wearing and attractive forms.
Fine silver is too soft for most jewellery and tableware use, so sterling silver, an alloy containing 92.5% by weight of silver and 7.5% other metals (typically copper) is used.
Investment
Silver coins have long been amongst the common modes of exchange in the world, while silver bars are produced by refineries and mints globally for those seeking to store wealth or invest in the precious metals market.
Silver prices have risen five-fold this century, and although the market can be volatile, investment silver is commonly used as a hedge against inflation or as a way to diversify an investment portfolio.
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.
