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The Case for Investing in Silver
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Archive for July, 2010

The Case for Investing in Silver

Historically the price ratio of gold to silver is sixteen to one on the high side, and twelve to one on the low side. That means that the true price of an ounce of silver should be between $69 and $92. Not only is the price of silver favorable, but the metal’s demand is increasing on other fronts.

Industrial Uses for Silver

A new industrial use for silver metal was recently devised by C. F. Stinson Inc. of Rochester Hills, Michigan, who developed a textile for upholstery with silver ions embedded in the fabric. The reason for using silver is because of silver’s antibacterial properties, which the medical industry has long been aware of. “We refer to our new collection as upholstery with its own immune system,” said Glenn Stinson, Vice President of C. F. Stinson.

“These products address the demanding needs of the healthcare marketplace by combining environmentally friendly attributes with exceptional durability and a built-in ability to naturally and continuously resist bacteria and other microorganisms,” Stinson also said. “Agion (silver ion) is embedded into the fabric within micron-sized carriers. The silver ions are activated only as needed; for example, when upholstery comes into contact with moisture, such as from a sneeze, or incontinence which can occur in patient-care areas.”

Stinson’s supplier for the silver ions in their upholstery is Agion Technologies of Wakefield, Massachusetts, who provide antimicrobial silver solutions to companies making products that combat the growth of bacteria, mold and fungus. According to their website, Agion’s marvelous technology is used in “consumer, industrial and healthcare industries and has been incorporated into a variety of products including cell phones, shoes, keyboards, pens, water filters, air conditioning and heating units, medical catheters, ice machines and faucet handles. Agion’s customers include many leading brands such as Motorola, Sherwin Williams, AK Steel, Carrier, DuPont, Honeywell, Adidas, Sanford/Paper Mate, Ice-O-Matic, Scotsman, Stanley Bostitch and Oster.”

Silver in Solar and Green Technology

According to The Silver Institute, silver’s reflective properties have made it the metal of choice for solar mirrors in new green technology. ESolar and NRG Energy, Inc. are ambitiously partnering to build plants in the western United States with the expectation of growing internationally. This need for silver in the solar mirrors will place an increasing burden on silver supplies.

Depletion of the World’s Silver Supply

According to the Contrarian Investor’s Journal, “buried within the facts of reports by the United States Geological Survey (USGS), at the current rate of production, the two metals that will run out first are gold (30 years) and silver (25 years). Given that silver has much greater industrial use than gold and assuming that its usage will increase along with the rise of China and India, it is likely to run out much sooner than gold.”

Silver guru Ted Butler predicts a huge price increase for silver due to its dwindling supply, devaluation, investor awareness and demand, and growing commercial use. With the new applications for silver in textiles, solar, and even batteries, he is probably right. An investor looking for a good return may want to consider buying silver.