Many people are enthusiastic about silver, which is quite surprising because it has disappointed for so long. Which of the following best describes these people? Are they savvy investors and speculators who know a bargain when they see one? Or are they true believers, completely out of touch with the markets? There’s probably truth in both of these answers.
It’s hard to deny that at least some of the interest in silver today is the remnant of two spectacular moves it made years ago. The first was in 1979-1980, when the Hunt Brothers, at the time among the wealthiest speculators in the world, tried to control the global silver market. They made huge and repeated purchases on margin, which drove the price higher. And as the price of silver continued to rise, they were able to purchase still more silver on margin, driving the price even higher. The Hunt Brothers were brilliant and very daring, and their plan probably likely would have worked had the commodity exchange not altered the rules on margin very suddenly and in the middle of the game.
The second really big move in silver was in 2010-2011. At that time, the markets were worried about rising inflation - and with good reason. “Governments all around the world reported heightened inflation, which concerned investors who had bet heavily on traditional assets,” writes the Hero Bullion website. Also, at the same time, there was a spike in industrial demand for the metal. On both of these occasions, it made a high of approximately $50/ounce
But for most of the other years between 1980 and 2024 – some 44 years to be precise – silver did little to reward its enthusiasts, and even the few moves it made were more modest and relatively short-lived. In fact, as former Quantum Fund co-manager Jim Rogers is fond of pointing out, silver is one of the very few assets whose current price is way below what it was decades ago. The very recent price of approximately $29/ounce is just 60% of the all-time high. Compare this to the price of other commodities and items such as homes, autos, education, food, energy, travel – the list goes on and on – and clearly silver is lagging way behind.
Why So Cheap?
Why have so many items become more expensive while silver has hardly increased? This is a very good question, and it becomes even stronger when considering that silver is not a new, exotic investment that can quickly fall into and out of favor, has been accepted as money for millennia, and is used by major industries and in more applications than ever before.
Wikipedia points out many of them. “In addition to its use in currency and as an investment medium (coins and bullion), silver is used in solar panels and other green energy production, water filtration, jewelry, ornaments, high-value tableware (this is where the term ‘silverware’ comes from) and utensils, as an electrical conductor, in window coatings” and much more.
Using silver as currency dates back to Biblical times – thousands of years ago. Some young people may be surprised to learn that not all that long ago, dimes, quarters, half-dollars, and dollar coins were made out of silver and used by Americans to pay for the purchases they made every day.
Moreover, silver coins were and still are valued in countries around the world. Many of them still mint such coins for investors and others who purchase them as a store of value, and by collectors who prize them for their beauty, rarity, and possible numismatic value.
Given the steady demand for silver, why hasn’t the price increased more over the years? Experts suggest a variety of answers, and they include: supply and demand for the metal, fluctuating interest rates, the strength of the U.S. dollar, the strength of the economy, and more. Another explanation is the emergence of Bitcoin and other cryptocurrencies which they suggest may have siphoned off funds that otherwise may have been used to invest in silver.
And still others believe that the price is being held down by sophisticated traders who are manipulating the market to keep the price artificially low. According to publisher and silver enthusiast Jon Forest Little, “They can do this on the COMEX, a paper market where one year of global mining volume can be transacted in a day.”
We’ll leave it to the experts to have the final word on that. However, the low price works just fine for those who want to accumulate the metal, and surprisingly those parties include some very powerful and well-known players.
Global Demand
According to an article on Zero Hedge, “In 2023 silver mining companies collectively produced 831 million ounces of silver, with the top 20 companies contributing 43% of that total – 371 million ounces.”
Silver is mined in many countries. The top 10 producers are Mexico, China, Peru, Chile, Australia, Poland, Bolivia, Russia, the U.S., and Argentina. They account for a majority of the world’s supply of silver, which is important for miners but, as mentioned above, for many other industries, too.
Earlier this year, Idaho-based Hecla Mining was ranked the largest silver producer in both the U.S. and North America. Hecla, whose mines are located in Alaska, Idaho, Quebec, and the Yukon Territory, produced more than 45% of the silver in the U.S. In 2022, that came to 14.2 million ounces of silver, the majority of that from its Greens Creek Mine in Alaska and Lucky Friday Mine in Idaho. Other large U.S. silver miners include Coeur Mining, Grupo Mexico, Rio Tinto, Lundin Mining, and Argonaut Gold.
The shares of hundreds of silver miners trade on U.S. exchanges, but choosing good ones for investments is not easy. There are the usual risks of investing in any publicly-traded company and also other considerations such as inflation and deflation, geopolitical risks, currency risks, natural disasters, and more.
Some silver mines are quality firms with enough estimated resources to last for years, but not all are. In any case, many trade in the $5/share range, even more in the $1/share range, and a surprising number for just a few cents/share – way below the price of a lottery ticket. Over time, a few these will probably appreciate dramatically, while many others will make very interesting wallpaper.
Has the time come to consider silver by its prospects and not its past performance? As they say, “Don’t judge a book by its cover.”
Sources: geeksforgeeks.org; herobullion.com; jmbullion.com; kiplinger.com; silverseek.com; wikipedia.org; zerohedge.com
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
