Why Silver is More Valuable than Gold.

Why Silver is More Valuable than Gold.

I’ve always loved the cool and put together look of silver jewelry. It was the first precious metal that I could afford to work with in the early days of jewelry making. Over the years it continues to hold a strong foundation in my work because of its relative affordability (as compared to the other two precious metals gold and platinum), it’s beauty, its workability, and the value it adds to any collection of jewelry. 

Throughout history humans have adorned themselves in both gold and silver as portable currency.  These precious metals are very similar in their chemical makeup and are often found together during the mining process.  In some parts of the world Silver was far more rare than gold, as in Ancient Egypt, and so it was more valuable than gold.  

Price of Silver vs Gold.

As of July 2022 we can buy silver at 1/87th the cost of gold. That means that for 87 ounces of silver we can purchase 1 ounce of gold. The purchase price of silver today is 20.59 an ounce and gold at 1773.90 an ounce. In Roman times the silver to gold ratio was set at 12/1. Meaning 12 ounces of silver would equal one ounce of gold. In 1792 the gold to silver ratio was set at 15/1 by the United States government (4). Todays ratio of 87/1 feels like a glitch in the system. How could sterling silver be so undervalued?

Rare earth metals. With modern technology and global trade we have access to earth’s resources like never before. We know that silver is more abundant underground than gold and platinum, occurring at 0.075 parts per million underground, as compared to gold at 0.004ppm and platinum 0.005ppm. Silver is still a rare earth metal. Compare silver to copper at 60ppm, and to nickel at 80ppm. 

It is difficult and more expensive to mine silver than is reflected in the actual selling price. Silver is typically found as a byproduct of mining other metals. And silver’s supplies are quickly dwindling. There are less years ahead of future silver mining than gold (2). Above ground there is about five times more documented gold than there is silver. Because gold is more expensive it is more likely to be reclaimed and collected. Whereas the low paper price of silver and rising energy costs, cause silver to be deemed uneconomical to reclaim it. Much of the silver supply that has been mined and used, gets thrown away (2) (3). Of the 60% used for industrial purposes, 80% ends up in landfills. (4) Silver jewelry on the other hand is often collected, passed down, or reclaimed and refined.

Value and use of silver. Because silver has so many useful properties, it is not only hoarded as is often the case with gold and platinum, it is used in many industries. Roughly 50% of silver supply is used for industrial demand as compared to gold at only 10%. Silver is the best conductor of electricity, it is the best reflector of light, it has antibiotic properties and does not corrode.It is widely used in the medical field, in tech and electronic industries, photography applications, and water purification systems. Every computer, cell phone, and household appliance uses silver. New technologies are built everyday incorporating the use of silver.  

Silver is becoming more rare and more in demand, but the price of silver does not reflect this fact. Because of the demand, limited supply, and low cost of silver, It is predicted that silver supply will run out in the coming years. Silver is indeed a valuable metal with many uses and a rapidly dwindling supply, however the price of silver does not reflect this value. Many speculate it’s only a matter of time before the price of silver reflects its true value. If people truly understood the investment opportunity and value of silver, it would surely be sold out. 

Silver is a beautiful and versatile rare earth metal that is incredibly undervalued. In my opinion, adorning oneself and building a silver jewelry collection may be a great and overlooked investment opportunity. 

  1. https://firstnationalbullion.com/rarity-of-silver/#:~:text=Gold,%2C%20portable%20wealth%2C%20and%20jewelry.
  2. https://www.silverbullion.com.sg/Articles/Detail/How-Rare-are-Gold-and-Silver/2038
  3. https://www.jmbullion.com/investing-guide/james/silver-supply/
  4. https://www.mining.com/web/silver-demand-to-exceed-supply-again-this-year/

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