Industrial Silver – Investments To Last 50 +Years!

The monetary function and investment demand for silver has been in the news quite extensively in recent months. The investment side for this precious metal of course is extremely important. However we also cannot forget the sheer importance and value that comes from the metals industrial side. This provides for newer technologies as well, according to Phil Baker President and CEO for Hecla Mining.

Recently Baker was quoted as saying that “the silver markets of today actually can be closely compared to the same markets a century ago”. At this time photography was really starting to take off and industrial silver demand was on the rise. “From the mining company’s inception in the late 1890’s through the early 1980’s silver mining had been a booming business with huge physical demands in industrial applications for the white metal. However, by the mid 1980’s and during the next twenty years the silver industry had “flat-lined, it bottomed out”.

These days the silver industry is booming again. The industrial applications for silver have exploded with new technologies growing significantly that require this very special metal. The industrial silver applications alone within the modern silver industry are once again looking to become a great business. Investors can invest into this industry now and reap the financial benefits from it for the next fifty years or more.

There are two key reasons for these predictions

1. Silver’s exclusive properties include being highly conductive, highly malleable and highly reflective. In addition one of its unique characteristics more recently discovered its effectiveness as a very strong biocide. Now used extensively throughout the medical industry. Today it’s used in everything from band-aids to solar panels to iPads. Fifty percent of silver’s demand today is directly connected to technological usage alone. From WWII, then again at the start of the new millennium, new technologies have been discovered far surpassing the decline for photographic usage. Photographic demand used to be the largest industrial application for the precious metal but now it’s almost extinct. Baker say’s current applications for silver are not going away. It appears now, every day some new development comes out requiring the use of this precious metal.

2. Why is Baker so confident about the industrial side of this market? Because all the new products coming out, are set to expand greatly within the next few years. Baker believes that trending towards ever- rising populations, sets up the next phase for these technological products to enter ever-increasing markets. An example, South Korea where twenty years earlier silver consumption was roughly 0.05 ounces per person. If you were to look at those numbers today, you will find these numbers have significantly increased to around 0.5 ounces per person. Chances are China will be experiencing the same increase today as well. Above all, these new applications currently require this natural resource.

Baker also said while demand is still high, that supply, at least for the short term is running behind. Dating back to 2005, industrial silver had been in a depression dating back twenty years. During this time new exploration for silver was not profitable, therefore silver mining operations were not cost effective, many silver mines were shut down. In 2005 the rise in physical demand was needed as new technologies sparked more and more interest for the precious metal. Mining operations once again started into production with exploration for new resources on the rise.

There is a problem within the silver market however which underlies the physical demand for industry and technology. The physical demand today is growing at a much faster rate than can actually be mined. Mines currently are having supply shortages, creating gaps in supply for the physical metal. At some point above-ground stocks will need to be shifted from investment to industrial usage. Of course this is not likely to become one-way traffic as investment demand always goes up and down.

When the investment side is in a downturn, expect explosive downside movement within the markets. Over the long-term however, the silver market should still be very impulsive and volatile to the upside, mixed with market dips where lower prices will still occur providing excellent investment buying opportunities.

Tom Genot –
 

Photo Credits: As solar firmengebaude By ChristofferRiemer (Own work) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons