Silver is a very interesting precious metal, although it is anything but scarce. Compared to gold, there is a lot more silver ore – and more silver deposits – to be found all over the world. Despite this aspect, it remains a solid investment, all things considered.
Silver is Somewhat Common
When people think about mining cryptocurrencies, scarcity is often a factor to take into account. Gold, for example, is not found in every single country around the world. Its biggest concentrations are usually found in mountainous regions, or in the case of Alaska, on the bottom of the Bering Sea.
Silver is a very different creature altogether. It is, according to statistics, the 68th most abundant element on our planet. Smaller quantities of silver can be found nearly anywhere in the world, although it may take some time to effectively come across it.
Larger amounts of silver, on the other hand, are found primarily in North and South America. These two regions are home to a lot of mining companies, both for silver and gold. It is also possible to find one of these precious metals as by product of the other, increasing one’s potential for profit accordingly.
To this date, North and South America combined produce half of the world’s silver supply. There is no end in sight either, as new deposits have been discovered on a rather regular basis. This often occurs when one is looking for copper, sulfur, or zinc.
Mining Remains Profitable
Prior to the most recent silver price surge, mining operators were already in profit, for the most part. Even at half of the current silver value, they are not losing money. This further confirms how economically viable it is to mine silver, and how little money has to be spent to extract bigger quantities.
As such, it is safe to say that scarcity is not much of an applicable trait for silver. While it can’t be found in the atmosphere, or on the ocean floor, it is abundant in many other locations.
More importantly, the mining of silver keeps ramping up. Breakthroughs in technology have allowed for far more efficient and streamlined mining operations. This further reduces the cost of extracting the ore.
The silver price has gone through a surprisingly bullish period for quite some time now. This uptrend is not coming to an end either, if analysts of Bank of America is to be believed. The ongoing weakness of the US Dollar continues to fuel demand for precious metals.
More Silver Price Momentum is Coming
Several factors are feeling the demand for precious metals. This will, by default, impact the prices of silver, as well as gold and other precious metal. These safe haven assets have been in high demand since the coronavirus pandemic began. Judging by the current ongoing developments, it seems unlikely that this demand will decrease.
One important aspect to keep in mind is how silver has many use cases. Gold, on the other hand, does not, which may explain why its price has been slower to rise in comparison to its little brother. Silver’s value has genuinely exploded, and even more than doubled since March of this year.
Contrary to what most people expected, the US Dollar is not performing all that well. The greenback is losing value against all major currencies, including the Pound Sterling and Euro. The GBP/USD pair has hit its highest level since March, further confirming that the Dollar is not pulling its weight right now.
A weaker US Dollar will continue to fuel gains for most markets. It is evident that the stimulus checks and other helicopter money packages are now crippling the nation’s economy. As unemployment figures remain high, and schools are still unlikely to open again, this situation will not improve. A bullish sign for precious metal, but bad news for everyone who depends on fiat currencies to make a living.
BofA Analysts are Bullish
For analysts, the current market sentiment isn’t making life that much easier. Those working for Bank of America aren’t too sure about what to make of this current situation. In a new report, the BofA Securities arm indicated that this is just the beginning of the bull run.
More specifically, they expect to see gold rise as high $2,159, and silver could very well top $30.49. Even copper has received a near 15% upward value adjustment. It is, for most traders, all about precious metals right now.
A similar sentiment can be found across cryptocurrency markets. Bitcoin is on its way to hit $12,000 again, whereas Ethereum inches closer to the $400 mark. All of these crypto assets equally benefit from the weakening dollar, and continue to follow a similar trend to gold and silver.
Throughout the centuries, silver has found a use in many different segments and industries. Some of these are still viable today, whereas others have been abandoned a while ago. Below are a few more examples of modern day sue cases for this precious metal.
Engines of any Kind
Some people may be surprised to learn that engines have silver bits in them. Whether it is a car engine, one for a motorcycle, or any other, they all contain engine bearings. Every single unit is made of steel electroplated with silver. The choice for this precious metal is straightforward: it has a high melting point to cope with heat generated by the engine in question.
Another use case for silver in engines is as a lubricant. Opting for this choice ensures friction between the ball bearing and its housing is reduced to a bare minimum. Furthermore, research was done to utilize silver in diesel engine filters. It could have potentially replaced platinum to catalyze oxidation of matter. However, diesel engines are slowly being phased out to protect the world’s environment.
Hygiene and Silver mix Well
No one will look at a hygiene product and wonder how much silver is in there. It is a question people perhaps should ponder more often. Silver has tremendous antibacterial properties – a powerful tool for creating triage bandages – making it a valuable tool for the production of water filters.
A silver coating can prevent the buildup of bacteria in such filters, for example. The same goes for water purification systems, which often make use of silver ions to kill microbes.
The same properties have begun making their mark on the food industry. The packaging of food, for example, now contains nanosilver coatings. Even refrigerators may have such a coating to ensure food remains free from external threats.
Mirrors or Windows may Contain Silver
One interesting aspect of silver is how, when polished, it becomes very reflective. There are numerous applications for this concept, including mirrors.
While the use of silver as a coating on transparent glass has reduced a bit, some older mirrors will still have this layer. More modern creations use aluminum, because it is a much cheaper option.
Owners of windows which reflect sunlight and keep the interior or a building cool have a silver coating on their glass. It is unclear if the same results can be achieved by using other – and potentially cheaper – metals.
Dental Cavities and Silver
Most people who walk around with a dental cavity filling will have small traces of silver in their mouth. It applies primarily to older fillings, as modern ones have a completely different composition.
This is also part of the reason why dental cavity fillings used to be extremely expensive decades ago. Using silver for such purposes used to be a costly endeavor.
Similar to gold, the silver industry is impacted by COVID-19. Although this hasn’t triggered any major problems just yet, that situation may change soon. Several companies are struggling to move their silver supply across borders.
Silver Logistics Worsen
It was somewhat to be expected that COVID-19 would continue to wreak havoc throughout 2020. With new infections popping up globally, the same issues which arose several months ago will come into play once again. For companies active in the precious metals industry, this will mean logistical problems more often than not.
Albeit there have been signs of a looming silver shortage, the situation may grow worse. Any company producing silver in Mexico and Argentina will run into export issues. Travel restrictions have been imposed once again, making it very difficult to move metals to other countries.
In Argentina, for example, the number of flights coming out of the southern part of the region is virtually nonexistent. Mining operations in that part of the country cannot export their ore, bars, or other goods conveniently. Getting workers to and from these locations can be equally problematic.
Overall, the situation in Mexico is relatively similar. Logistics remain a key problem for as long as COVID-19 continues to claim victims. As the global rate of infection is ramping up – primarily in Middle and South America – it seems unlikely that things will improve.in the foreseeable future.
Lower Production Equals a Higher Price?
On paper, the silver price will rise if the production and supply is lower than normal. COVID-19 may prove to be an interesting catalyst in this regard. Silver has many industrial use cases, as it is found in a lot of products and goods. That demand will not necessarily slow down all that much during this pandemic.
In fact, some industries note stronger demand for silver than normal. An interesting turn of events, and combined with a decrease in production, anything can happen. At the same time, it is possible that production will be able to ramp up again in the near future. It is unclear what effect that would have on the current silver price trend.
Solving logistical issues is never done overnight. Especially not when so many external factors tend to disrupt one’s plans. As the overall available supply of the precious metal keeps shrinking, interesting things are bound to happen. What those things are exactly, remains unknown.
Unlike gold and most other precious metals, silver has plenty of industrial use cases. More importantly, these use cases are quite varied. It is thanks tot his aspect that demand for silver hasn’t diminished all that much due to COVID-19.
Silver in Electronics
The primary use case for silver can be found in the firm of electronics. The metal has thermal and electrical conductivity benefits not found in most other metals. Nearly every electrical switch on the planet has a small quantity of silver to join and separate contacts accordingly.
Most of the electronics containing silver quantities are found in cars. Automobiles have numerous contacts controlling electronic features. The same goes for nearly all consumer appliances one can think of today. This is the primary use for silver in everyday life, and one that continues to fuel demand for this metal accordingly.
Silver in the Energy Sector
Renewable forms of energy introduce another use case for silver. More specifically, solar panels require silver paste contacts to capture and carry electrical current. Combined with the reflective nature of silver, it is possible to reflect solar energy into collectors to generate electricity.
For those familiar with nuclear energy, the control rods in power plants often contain silver. This allows for the capture of neutrons and slowing the fission rate in nuclear reactors. Anyone who has seen the Chernobyl series will know how important these processes are.
Soldering Benefits From Silver
Most people may not be aware of the use of silver in soldering. Creating joints between metal pieces is achieved by using this metal. It is worth mentioning that this process doesn’t require the purest of silver, allowing for the use of metal otherwise discarded as scrap.
Chemicals and Silver
It is interesting to note how one can use silver to create not one, but two chemicals. Both formaldehyde and ethylene oxide are created with this precious metal. In turn, they are used for flexible plastics, antifreeze, solid plastics, protecting coating, disinfectant, and so forth.
Photographers and Silver
In the world of photography, there will always be a demand for silver. Although digital media has taken over from traditional film photography, there is still a market for the latter. Silver halide crystals found in camera film will affect the light sensitivity of the photograph. A very similar process is also used in X-Rays, among other things.
During Q2 and Q3 2020, the silver price has seen a significant price. Many people wonder how long this situation will last. A dwindling supply coming out of Latin America certainly has the potential to keep this momentum going a while longer.
Silver Supplies are Drying up
It is interesting to see how the COVID-19 pandemic continues to disrupt the world’s economy, supply chains, and industries. Even precious metals dealers are facing a lot of pressure, primarily because it has become a lot more difficult to obtain silver as of right now.
To put this into perspective, there is some supply-related trouble brewing in Mexico and Peru. Both regions are home to mining operations making up 40% of the global silver supply. Due to COVID-19, these mines were forced to either shut down or significantly reduce their output.
Based on recent findings by the Silver Institute, it is very likely that a market deficit will occur for the first time in years. Mining efforts remain disrupted in the area, and there is no real improvement in sight. A long-lasting disruption can certainly fuel demand for silver even more, thus affecting the price in a bullish manner.
It is expected there is a 13% decline in silver production from Latin America. This will, in turn, trigger a decrease in the yearly global silver supply by as much as 7.2%. Given the industrial use cases for this metal, as well as the current demand from investors, something will have to give.
Bullish Silver Price News?
As the second wave of COVID-19 sweeps through the world, production of precious metals is likely to take another hit. Even the biggest operations will not be spared this time around. Not all regions are affected equally, however.
Some sources claim that Peru’s silver output should return to normal before the end of 2020. A lot of that outlook will depend on how the coronavirus situation evolves. Until a vaccine is developed, this uneasy situation may remain in place, up to a certain degree.
Combined with negative interest rates looking to worsen, and ongoing financial uneasy in traditional markets, Q3 2020 will prove to be very interesting. No one really knows if the silver price surge will continue, but that appears to be a plausible scenario right now. Surpassing $25 will be a challenge, but it isn’t impossible.