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Velgud

Usage Ratios For Silver

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Hi everyone, I'm relatively new to HPC and am quite young and very inexperienced in economics.

As almost everyone on this board, I firmly believe there will be a significant house price correction, but also feel that we are going to see a considerable amount of inflation over the next few years.

I am an absolute novice in terms of investing, literally, I have never before invested in anything other than myself (learning new skills etc). I have spent the last couple of years trying to clear my mortgage balance and am almost there, but now feel the time is right to slow up on the balance payments and start using some of the saved money to invest in inflation beating investments. Pre Christmas I had hoped to buy gold but had a few slow business payments and by the time I received them gold shot from 784 to around 900 and is now around 960. I dont know enough about gold investment but common sense would suggest I have somewhat missed the boat.

The more I read, the more I feel that silver is the way forward and I am considering to soon buy around 15kg. I like the idea that it is a utility as well as a precious metal. Most notably its uses in computers and other techs (China demand), war machines (US demand lol) and medical equipment (European demand). I also believe that demand is increasingly higher in ratio to supply and therefore would presume that regardless of a predicted drop in value of our monetary systems that silver should continually rise. So it would seem the lower geared gamble is a relatively safe bet and the higher geared gamble would be a welcome bonus.

My concerns are that during a recession, I can only presume that Western demand for jewelery and electronics would fall considerably. Therefore I think that before I make any firm decisions on what to do I should learn the usage ratios of silver, i.e. what percentages of silver is used in each industry and continent.

I have already searched for these answers but am having little joy in finding the answers. I assure you that I would help myself if I could!

Sorry to babble on somewhat, I'm a young lad with no experience and simply trying to help myself as best as possible in preparation for what appears to be quite a bleak economic future!

Any advice would be warmly welcomed

Many thanks in advance :)

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I buy gold mainly because it is much less risky than silver. £5 gold/£1in silver ratio.

I have copied my own notes on silver here.

Use bullionvault or goldmoney (offers silver, registration a pain) or take physical possession (Chard and goldline are good and sovereigns/ britannias are exempt from Capital gains tax), ETF's or any other paper promise of gold defeats the whole point of gold - an asset that cannot be defaulted on.

Silver

Silver is different to gold, it has both industrial and monetary demand; monetary demand is very similar to gold’s.

Industrial demand is substantial, however the advent of digital photography has cut photographic demand at about the same time as the large stockpile from coin removed from circulation and held by central banks has been exhausted.

Consumption has exceeded production for many years because of this stockpile.

Photographic demand was only ever 8% of total demand because 75% of that used was recycled.

Historically silver was about 1/15th the price of gold, today it is about 1/50th therefore silver may have more scope for price appreciation.

Historically when gold booms this ratio has returned to nearer 1/15 that is the silver price rises much faster than gold’s – usually as a quick exponential spike and bust near the end of a gold bull run.

Production is linked to production of lead, zinc, copper and gold, as it is almost exclusively extracted as a by-product of the extraction of these metals.

In spite of substantial deposits of silver being known hardly any primary silver mines exist because they generally cannot be profitable unless prices go much higher.

Industrial metals such as copper, nickel, lead, tin etc. have had a speculative price boom recently but silver has not.

A silver price bubble occurred about 25 years ago and in this period much privately held scrap was mobilized (broken candlesticks, old coins etc.), a future price spike will probably therefore not produce much privately held scrap because in the last 25 years few people have bought solid silver items unlike in Victorian and earlier ages when many utensils were made of silver.

Industrial demand is very insensitive to price because the amounts of silver used in its applications are small.

The main applications are electronics (e.g. every mobile phone has a small amount of silver in it this silver is uneconomic to recover), as a bactericide in air conditioning and medically.

Environmental regulations are causing a switch from lead solder to silver solder in electronics.

Industrial demand may fall in a recession.

The future silver price is hard to predict, it may rise very substantially, because demand is fixed and higher prices will have little effect on production.

There is evidence that market manipulation has been taking place so this may produce a bubble similar to gold at the end of the London Gold Pool.

Unlike gold silver is not held significantly as a monetary metal in Asia, so the rise of China and India may see silver becoming less important as a monetary metal.

It is in my opinion a good bet that future prices will be volatile and there will be periods of much higher prices but this is by no means a sure thing.

Silver costs about £10 per oz to buy, if prices in inflation adjusted terms return to the 1980’s level one oz would be worth about £100.

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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