Like Gold, silver has been known to mankind as a precious metal since ancient times. Silver is not just
bought as an investment or fashioned into jewelry like gold; it is also the precious metal widely used
in industry. Silver coins were widely used since 561 BC and later on silver became the mass form of
coinage throughout the world. Silver’s irreplaceable properties include its strength, malleability and
ductility, its sensitivity to high reflectance of light and its electrical and thermal conductivity. Silver
prices have suffered in 2009 as the metal used in industrial application such as in glass and electronics,
batteries among others, reduced buying sharply due to the economic crisis. Silver was among the best
performing commodities in 2010 gaining 83% during the 12 months ended 31 December. Shares of
Mexico City – based Fresnillo Plc, for example, the world largest primary silver producer, gained 114%
Silver futures hit a 31-month high at $36.043 an ounce on March, 9 2011. With economic growth
picking up, there may be more commercial demand for silver. Industrial production in the United States
advanced at a rate of 5% or more from January to February 2011. In Germany, China and Russia, the
increases during the period were even greater. Another source of demand which has helped propel
both silver and gold in recent prices is the growth in the exchange-traded funds (ETF) and related
investment tied to performance of the metals. As of 11th of March 2011, there was a 21% gain in ETF
holdings of silver from a year earlier.
Salient 'market' features of silver are:
- Silver is often seen as the poor man’s equivalent of gold.
- Silver has benefited from demand for the ‘white’ look in ornaments which mirrors fashionable designs
of white gold (an alloy of gold, platinum and palladium) but at lower prices.
- Besides being a precious metal, silver’s unique physical and chemical properties like its strength,
malleability and ductility make it a very useful ‘Industrial Commodity’, hence its contribution to the
trading activity of the overall commodities segment.
- Due to its excellent electrical conductivity, silver finds many applications in electronics from printed
circuit boards to switches and TV screens, especially in the Plasma Display Panels.
- Because of its resistance to pitting and tarnish, silver is used to make Digital Video Disks and Compact
- The price of silver is determined by its mine production and the prices of other precious metals. Silver
is produced as a by-product of copper/lead/zinc extraction.
- The relationship between silver and economic activity is strong, given that around two-thirds of total
silver fabrication is in the industrial and photographic sectors.
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