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The possibility of silver-based catalytic converters. In 2003 a bill was passed by the congress to study the use of silver in the automotive catalytic Research and testing is currently being carried out in a three-year government program. New Developments in Superconductors require silver tape A new form of cabling has recently been developed which can carry more electrical current in much smaller spaces with far less resistance. This new technology (Nobel Prize awarded in 2003) should one day replace old power grids, especially in larger cities where space is at a premium and large electrical loads a necessity. Environmentally friendly replacement of lead based solders (Silver is unique in that it can join many different metals together at temperatures well below the metals melting point) The European Union law, which bans the use of lead based solders,comes into effect on July 1, 2006. Silver used as solder accounted for some 37.5 M ounces in 2004, and is likely to increase significantly in the coming year because of the EU's decision. THE INDUSTRIAL SCRIMMAGE FOR DWINDLING SUPPLIES As a precursor to this brief article, many of you may already be familiar with the dramatic rise in palladium prices over a four year period beginning in 1997. By the year 2001, the metal had risen from just above $100/oz to a high of $1100/oz. This was a result of industrial users (e.g. Ford Motor Company) panicking about a lack of supply and consequently building the necessary inventories so that factories would not need to be shut down. Silver should experience a similar price rise due to future industrial desperation, only unlike palladium, which has since cooled off, the industrial scrimmage for silver will be only one of many unique forces acting on silver. This should then result in significantly higher (relative terms) and much longer sustained gains in silver. BUT WHAT WOULD CAUSE SUCH DESPERATION? The answer isn't very hard to understand: First of all, Silver, aside from petroleum, is used in more applications than any other commodity. However, unlike petroleum, the amount of silver used in its myriad of applications is but a tiny percentage of the item's total cost. This means that silver is basically price-inelastic when it comes to industrial demand, meaning that end-users would not readily substitute other metals even in a dramatic price rise. Thus, a significant price rise would more than likely lead to the build-up of inventory than the elimination of silver due to substitution of some kind. * Secondly, because of the now 25 year old “just-in-time” policy developed and popularized by the Japanese, all inventories of commodities have been reduced significantly. Overall, this has helped create a much more lean and efficient industrial machine, but such 'leanness' is very vulnerable in lieu of any transportation disruptions. Therefore, this fear of unavailability could easily lead to panic among industry giants causing them to stockpile bullion. Having been in 'deficit-mode' for so long (between 15-60 years), a shortage at some moment in time is inevitable. The only way for these end-users to protect themselves will be to build up inventories by buying all available physical silver. It is only a matter of time folks, so I urge you to position yourself accordingly. Build up is the only feasible option for industry at the moment. Due to silver's low price environment, there hasn't been significant motivation to look for viable alternatives. Of all the metals, it is the best conductor of electricity, the most lustrous, strongly resistant to corrosion, not easily oxidized, and is quite soft and malleable. Though the advent of digital photography is an obvious exception to the rule of silver's 'monopoly', its effect (or lack of) on the silver market shall be thoroughly analyzed in a future article. A LITTLE SOMETHING CALLED 'EPITHERMAL DEPOSITION' Epithermal deposition is a geological term that accurately describes silver's distribution within the earth. It means quite simply that the majority of silver is deposited near the surface of the earth's crust, and that the further one digs the less silver he will find to extract. This necessitates that silver will become more and more expensive as time waxes on, as it will become more and more expensive to mine. Just as the price of oil has risen dramatically because of a lack of easily exploitable oil and fears of peak production, so too will silver one day rise in price accordingly, as it is also an integral yet finite resource of the world. For the many uses of silver see here. Speaking of finite resources, it certainly wouldn't hurt to get a feel for how much silver resources are left in the world (below ground). International Monetary Metals believes the actual amount of silver remaining below ground is much larger than those figures presented by the USGS below. The reason being that there are many unexplored areas in the world that are likely to house the next elephant supply of silver. The only problem is that the incentive to exploit these areas will require a much higher and sustained market price to justify the risks involved with production in these areas, as they are often located in places of environmental and political uncertainty. Also, many of these locations are remote, and the consequent problem of transporting to and accessing the refineries becomes another issue altogether.
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