Tuesday, June 7, 2011

Silver. A Monetary Metal

Silver is historically a monetary metal and, more lately, an industrial metal.

In industry, silver is a wonderful conductor of electricity. It is in most of the electrical gadgets that you have in your home and business. Gold is a better conductor, but obviously not used as much because of its value. For example, there is a new silver/zinc battery in use which may replace lithium ion batteries. These types of developments increase the demand for silver significantly.

Silver is also a great biocide. It is no wonder the higher classes in old England used silver ot eat off. It not only looked great but helped keep those little darling bugs away and hence disease. More and more uses for silver are being found in the medical world such as an ingredient in bandages and in medical devices.

Silver also has the attributes of money. Not as 'perfect' as gold, but a close second throughout history. Remember it has only been in the last 40 odd years that the fiat money system as we have it now, has been in place.

Here's a reminder of what the important attributes of money are:

  • Divisibility - into small units without destroying its value. Try cutting up a cow to act as money.
  • Fungibility - one unit or piece must be equivalent to another. Cows come with different quality meat!
  • Specific weight, or measure, or size to be verified and counted. 
  • Store of value
    - long lasting, durable, not be perishable.
    - it should be difficult to counterfeit.

Utah has just agreed to recognise silver as money again. You can see why.

As stated earlier, silver has taken a bit of a hit since early May. Some called the the sudden large percentage fall in price on May 2 to be a 'drive by shooting'. An attempt by the large bullion banks to suppress the price.

However, does it really matter if the 'big boys' are manipulating the silver market? It seems that these types of manipulations always end badly for the manipulators. If you are long pyhsical silver, the fundamentals will be what guides you. An it will remove the emotion from the decision.

Silver prices have gone up by 300% since this writer began a steady accumulation. And that is after the latest knockdown since May 2

So, the fundamentals then?

Falling mine supply and stored supply.
Increased industrial and investment demand
Silvers use as a monetary metal.

Gold in New Zealand dollars: $1895.65 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $54.08 per oz
Previous all time high: $45.45
 per oz

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

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