Thursday, January 22, 2015

Silver is an Interesting Metal

Normally on this blog we talk about gold or silver as it may relate to the monetary system. Both metals have a long history of being used as actual money and today both are still viewed as hedges people use for various reasons. But silver is an interesting metal on its own merits because of all its unique properties and the many ways it can be used. In this article in Popular Science we learn that now Stanford University is working on clothes that contain silver nanowires. Below some quotes from this interesting article and then a followup comment.


Instead of turning up the thermostat up this winter, why not just throw on some nanowire-coated clothing to stay toasty?
"According to the International Energy Agency, indoor heating accounts for almost half of total global energy usage, mainly on heating residential buildings. In a recent study published in Nano Letters, researchers from Stanford University describe a better way to conserve thermal energy. The nanomaterial-coated fabric they created traps heat inside a person's clothing, thereby removing the necessity to heat empty space and inanimate objects, and lowering the cost of household heating to (theoretically) almost nothing."
"The team began the research by looking for a wearable way to keep infrared radiation in the body. “Let’s say you want to make your clothes reflect heat, you need metal,” says Yi Cui, the lead scientist on the study. “But you’re not going to put metal on your body.”
"Instead of using rigid metal, the team decided to create a coating using easily bendable silver nanowires that can go on top of everyday clothing. The coating works two ways to heat up the body. For everyday wear, cloth coated with silver nanowires successfully reflects infrared radiation—something humans naturally emit—back into the body."
"To warm up even more, a person wearing the cloth can give it a charge while sitting at the computer. The movement of electricity from an electrical device across the cloth creates Joules heating, or heat generated while crossing a current."
My added comments:
This isn't going to suddenly create a massive increase in demand for silver. The article points out that one article of clothing only requires about $1 of silver at current prices. And it also notes that it will be a few years before the product can be sold commercially. 
It does however show there are many creative uses for silver and more will surely emerge over time. There is enough silver available today to meet demand for its industrial uses. But the supply is likely to begin to fall because all the larger silver reserves that have been found are already in production and are being depleted as they are mined and used up. 
Silver is used in almost all electronics (cell phones, TV's, all computers, tablets, mp3's, radios, etc). It is used in autos, weapons, x-rays, mirrors, solar panels, all kinds of medical equipment as an anti bacterial agent, and many more products including silver jewelry. In most products only a tiny amount of silver is needed so that even if silver were to triple in price, it would not great impact the total sales price of the product. And there are such tiny amounts of silver it is not worthwhile to try and salvage it. Once silver is used in most products, it leaves the supply chain for good.
Silver also has pretty healthy investment demand. Silver coins minted by the US Mint, Canadian Mint, and other mints around the world are seeing record sales. For most people who want to own some precious metals as an insurance hedge, silver is more affordable than other alternatives (like gold or art collectibles).
Silver is just an interesting metal as this Popular Science article illustrates. Based on the data available today, silver will diminsh in supply in coming years even as demand continues to grow. More global population insures demand will be there in a world where kids get a cell phone by age 12 (or even earlier in some cases). 
Here is an thought to consider in regards to the future for silver. If every family on earth were to own or use just one half ounce of silver per year, all the above ground supply of silver would quickly disappear and more than a year of future mining production would be needed to meet that demand. On the other hand, there are a few individual billionaires who could buy 10% of all the silver mined on the earth in one year by themselves at the current price. 
Sooner or later, the global demand for silver will overtake the available supply. This makes it an ideal long term store of value in a portfolio for anyone with some savings. It can even easily be passed on to future generations if not needed during the lifetime of the person who acquires it.  It's an interesting metal.

added note: Bloomberg runs this article on silver which points out some of the same things we have here. Here are a couple of quotes.

"Silver headed for a bull market in its best start to a year in more than three decades, supported by speculation that slowing global economic growth will spur demand for havens."
"Holdings in exchange-traded products backed by the metal have posted three straight weekly gains, while U.S government data show money managers raised their net-bullish wagers to the highest since August. An ounce of gold bought 71.4 ounces of silver on Thursday, compared with an average of about 58 over the past decade, signaling the white metal is inexpensive relative to gold."

No comments:

Post a Comment