By Danny Esposito
Some investors seem to have the notion that gold bullion is the only monetary precious metal. Those who have studied history understand that silver bullion has been used as money throughout history, making silver bullion’s association with money equal to gold’s.
Some investors argue that silver bullion is not a monetary precious metal, because it has more industrial uses than gold bullion. I would argue that silver bullion’s exciting new industrial uses make it a more attractive investment.
Silver bullion has the highest electrical conductivity of any element known to man and the highest thermal conductivity of any metal.
Electronic switches, batteries, electronic circuit boards, and televisions have a component of the precious metal in them. Silver bullion is the critical component that conducts the sun’s rays in solar panels into electricity.
Silver bullion’s ability to kill bacteria without harming the human body has made it invaluable in many medical applications. Everything from wound dressings to gowns to catheters to medical equipment…all manufactured with silver bullion.
Because of its ability to kill bacteria, silver bullion is finding its way into clothes and even the coating on mattresses, to prevent the spread of disease and bacteria. Many water filtration systems for pools, spas, and hospitals use silver bullion to kill bacteria.
Research and development continues to find new uses for the precious metal. It is estimated that three-quarters of the silver bullion that is mined out of the ground each year is already earmarked for industrial uses. This leaves less and less silver bullion for investment purposes.
China is the largest producer and exporter of silver bullion. However, over the last few years, it has cut it exports. Clearly, China has been using the precious metal for industrial uses and, as China is one of the largest manufacturers of solar panels, it needs the silver bullion for itself.
However, it wouldn’t surprise me in the least if, besides hoarding gold bullion as a reserve currency, China is also holding silver bullion to diversify its reserve currencies away from paper money.
It is also important to note that, since the crisis hit in 2007, investors—for investment purposes, viewing silver bullion as a form of money—bought roughly 5,000 tonnes of silver bullion. Since 2007, that number has reached over 15,600 tonnes. Although demand has fallen off recently by 10%, the long-term holders for the most part are not selling.
With Europe in a seemingly never-ending crisis, China in a slowdown, and the U.S. unable to grow consistently, the presence of a global recession is real and upon us. As such, money printing will be the solution put forth by central bankers, because it has been the only solution they have tabled since the crisis began—offering no other alternative.
China and the holders of silver bullion ETFs are preparing for this money printing by buying money: silver bullion. Therefore, along with the increased demand on the industrial side, silver bullion has being seeing increased demand from the investment side as well.
As money printing continues, gold bullion will rise; but silver bullion will rise with it, because both are monetary currencies.
If history repeats itself, once gold bullion rises, silver bullion not only follows gold bullion eventually, but also outperforms gold bullion by a large margin. Silver bullion is much more volatile, so investors must understand that investing with silver bullion comes with violent swings, but I believe it is worth it.
(Author is the editors of Penny Stock Detectives)
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