Industrial applications for silver have always been significant, but they have increased significantly in recent years. Silver is used in film, mirrors, batteries, medical devices, electrical appliances such as fridges, toasters, washing machines and uses have expanded to include cell phones, flat-screen televisions and many other modern high tech devices.

Increasing industrial demand for silver is forecast due to economic growth in China, India, Vietnam, Russia, Brazil and other emerging economies in South America, the Middle East and Asia. Growing middle classes are now demanding the quality of life and standard of living enjoyed by many in the West and thus the demand for silver will likely increase.

Silver is known as the 'healthy metal' and has many and increasing medical applications.

In a world that is showing increasing concern about the spread of diseases and pandemics such as swine flu, silver is being increasingly tapped for its biocidal properties. Research is ongoing on the use of silver and its compounds for therapeutic uses and on its potential use as a disinfectant in hospitals and other medical facilities.

Increasingly, silver's antimicrobial and antibacterial qualities are seeing it being used in all sorts of medical applications and this looks set to become a very significant source of demand in the coming years.

Silver has many unique properties which make it ideal and indeed essential in global industry - especially in the global photography, technology, medical, defence and electronic industries. Yet, silver is a finite resource and the supply of silver is increasing only very incrementally.

It is important to note that silver, unlike gold, is heavily used in industry and because of gold's much higher value, it gets recycled and all the gold mined in the world ever is still with us but a huge amount of silver has been used in photography, mirrors and other industrial uses in the last 200 years. The low price of silver makes recovery and recycling uneconomic.

Unlike gold, silver is like oil - as it is consumed in these many industrial applications it is gone forever.

Silver: Increasing Investment Demand
Investment demand for silver has risen in recent years as investors concerned about the value and safety of property, equities and deposits allocated funds diversify to the finite commodities and currencies of silver and gold. More recently, there have been increasing concerns about the value of paper currencies themselves (voiced by many including Alan Greenspan, John Paulson and George Soros) which is leading to further diversification into hard assets and precious metals.

There has been a marked increase in investment demand for silver in recent years. Some of the reasons why this trend is likely to continue are - the introduction of ETFs that track the price of silver, a new global liquidity bubble, the significant growth in the global money supply, the proliferation of millionaires, ultra high net worth individuals and billionaires, the proliferation of hedge funds and the exponential growth in derivatives.

The Bank for International Settlements has estimated that the total value of derivatives contracts was $592 trillion at the end of 2008 (up exponentially from $260 trillion in June 2006). Thus, dwarfing the GDP of the entire world which was estimated at some $61 trillion at the end of 2008.

There is still a debate as to whether derivatives are a good or a bad thing. Alan Greenspan recently warned they could lead to "cascading cross defaults." Warren Buffett is similarly concerned and has warned that they could trigger "serious systemic problems." Buffet said that "the derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. "

For this reason Buffett presciently called derivatives "financial weapons of mass destruction" in 2003.

Investors in silver bullion coins and bars are hedging themselves against further deflation and falls in property and equity markets. They are further protecting themselves against rising inflation, possible currency devaluations and still very prevalent geopolitical and macroeconomic risks such those posed by the humongous global derivatives market.

Silver is unique in terms of being both a monetary and an industrial metal. Silver is priced at less than $17/oz today. The average nominal price of silver in 1979 and 1980 was $21.80/oz and $16.39/oz respectively. In today's dollars and adjusted for inflation that would equate to an inflation adjusted average price of some $60/oz and $44/oz in 1979 and 1980. It is for this reason that we believe silver will be valued at well over $50/oz in the coming years and silver remains the investment opportunity of a lifetime.

Courtesy: www.goldcore.com

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