The Prospects For Silver
In the video below Robert Kiyosaki, who is known mainly as the author of the ‘Rich Dad Poor Dad’ series of books, explains why in his opinion everyone should consider investing in silver:
So now let’s take a look in a bit more depth at the ever increasing demand for silver that Kiyosaki refers to…
Silver is a metal with high commercial value and is therefore an important part of metal stock exchange centers worldwide including New York, London, Hong Kong and Australia.
The use of silver can broadly be divided into three categories: industrial requirements, photography and jewellery / silverware. An estimated 95% of the total usage of silver annually can be attributed to these three categories.
Industrial Uses of Silver
Silver jewellery, silver-coated furniture, silver tinted glasses and utensils and decorative items made of silver are the most obvious industries that influence demand for and hence the price of silver.
But it doesn’t stop there. Almost 90% of annually consumed silver goes into industrial uses. Silver works behind the scenes to keep life as we know it functioning smoothly. For example silver wires are used to effectively carry electricity, a number of gadgets are known to comprise silver components, and batteries, too, are made of silver.
Batteries, or secondary sources of power, are increasingly being made of silver instead of the traditional lithium ions. In fact button batteries that are used in watches, torch lights and various other gadgets are 35% silver by mass.
Silver is more expensive than lithium and carbon which are the traditional components of batteries, but it is an environment-friendly metal. With more and more countries and companies worldwide adopting greener ways of living, silver ions are increasingly being preferred to make energy storage units.
Influence of Solar Power
The growing trend of tapping of solar energy to meet energy requirements is increasing demand for silver. Solar panels need both high quality silicon and fine threads of silver to act as the conveyer belt within the unit that captures the energy. Solar panels are increasingly being used to meet the energy requirements of townships of up to 10,000 houses.
Though more expensive than other sustainable renewable sources of energy such as windmills, solar panels are much more efficient and thus a more preferable investment.
In India, prominent places of religious interest are using solar panels to cook food for millions of pilgrims arriving from all over the world. Similarly, a number of towns in developing countries have become testing grounds for experiments wherein more than 90% of the energy requirements of the region is met by tapping into solar energy.
The minting of currency coins was once a major part of silver usage. However, nickel and copper have now replaced silver in almost all nations. Mexico alone stands as a nation whose coins of all denominations are minted from silver. USA and Australia mint $1 coins from silver. Each coin is made of 99.9% pure silver and they weigh an ounce each. Silver prices in the nations that use silver to make currency coins are affected as the metal’s value is comparatively greater in these countries.
Chemical Industry Demand
Silver is very important to the chemical industry because a wide range of products that are used by the world’s population each day are produced with the use of silver at some stage in the process.
Chemical industries all over the world use more than 150 million ounces of silver as catalysts. The chemical reactions that precipitate ethylene oxide and formaldehyde – vital components of the manufacturing of plastic – require silver to act as a catalyst expediting the process.
The aforementioned ethylene oxide is used to make specialty fabrics and clothes of various types. Stove handles, computer key tops, electrical control knobs, electric gadgets, switchboards and various other items of everyday use are further examples. Ethylene oxide is also used as an anti-freeze coolant in vehicles, making it an indispensable part of the motor industry.
Formaldehyde, another chemical whose production entails the use of silver, is a building block of plastics and is used in the manufacturing of electronic equipment, textiles, heat resistant surface coatings, casings for various appliances, buttons, door knobs, handles, packaging materials, automobile parts, insulation materials, toys… the list goes on.
Amongst many other contributing factors, the increasing use of silver as a catalyst in chemical reaction is increasing demand for this precious metal.
Medical Industry Demand
Silver also boasts anti-bacterial properties which makes it popular and in high demand in the medical industry. In fact, it is the anti-bacterial property of silver that made it the preferred metal to make utensils to store food and drinks during long voyages centuries ago.
Many people today take for granted the use of silver to make utensils without realizing the actual reason for it. It is more than a matter of flashy appearances! The lustre of the metal and the malleability that allows a manufacturer to make artistic designs makes silver a hot favourite in the making of attractive looking utensils.
Silver essentially breaks the bio-chemical pathways that are required for bacteria to survive and multiply. The walls of bacterial cells are flimsy and as such they are adversely affected by the presence of silver. The cells of advanced forms of life are resistant to the action of silver.
It is this fact that necessitates the use of silver in making antiseptic band-aids. Deep cuts and burns are shielded from attack from bacteria, and the process of healing is expedited as the immune system does not need to focus on fighting off foreign substances. Surgical tools, needles, stethoscopes and other medical appliances that probe human or animal bodies are made of silver for this very reason.
Simply put, silver is an important part of global market trends and the demand for it is ever increasing.
Given all the above examples it is hardly surprising that experienced investors such as Robert Kiyosaki recommend investing in silver. Savvy investors realise that increasing demand for something will force it to increase in value over time and they are therefore prepared to take a long term view.