Tuesday, 17 December 2013

Back to Silver Fundamentals

Beyond the typical underlying changes in money supply there are very important elements of demand that continue to push the price of physical silver higher and higher. This is despite the fact that silver has been money for much longer then gold.

One element is the elasticity of demand for silver, particularly in the manufacturing of electronics.

Silver is the best conductor of electricity known to man and even at a current prices, it is very inexpensive for use in consumer electronics.

Silver Inelasticity

Silver cannot and will not be replaced by the industrial sector as a conductor of electricity for two reasons:

1) it is relatively inexpensive, and
2) it is the best product for the job.

When a computer manufacturer begins to source components to build its consumer products, the company buys tons of glass, pounds of silicon, and tiny amounts of silver.

When you buy a computer that costs $500-$1000, it contains, at most, 1 gram of silver. Most computers contain fractions of that amount, for a maximum cost of $.60.

Even if silver were to explode in price from $18 per ounce to $180 per ounce (which is a dramatic change) the price of the silver component in a computer would grow from $.60 to $6.

Thus, even after silver explodes in price, the computer manufacturers will still be very much willing to use silver since $6 on a $500 computer is just 1.2% of the price.

Technological Improvements

Silver's demand can easily be contrasted with the emphasis on technology during the past half century.

Prior to World War II, very few homes owned electronic devices and silver's industrial use was limited to only photograph development.

In contrast, the post-war family owned microwaves, TVs, toasters and other appliances including washer and dryers – which all contain silver.

And even in the past decade, the average consumption of silver by the average person has grown.

Today, each person owns a cellular phone, TV, computer, monitor, printer, router, and a myriad of computing peripherals that all contain silver.

It is without question that demand for silver as an industrial metal has exploded with technological achievements - but the biggest use for silver is just now being uncovered...

- Read the full article at Silver Coin Investor here:

Like this post? Subscribe to our free gold and silver newsletter