Market Overview: Silver (SI)

Silver has a long and colorful history as a store of value. Silver coin minted by a government began to appear in the eastern Mediterranean during 550 B.C. Rome adopted Silver as part of its standard coin. And then Silver became a medium of exchange for merchants throughout the world after the fall of the Roman Empire, since Gold was reserved for governments and the wealthy.

Until the demise of the Bretton Woods Gold Standard in the early 1970's,most countries used a bimetal platform (Gold and Silver) to back their currencies. Silver, being more abundant than Gold and thus costing less, has always been the metal of everyday business. Its lower cost makes it more practical for conducting transactions on a daily basis.

Silver has also played an important role throughout history in silverware and communications. The expression “born with a silver spoon in his mouth” is not a reference to wealth, but to the early 18 th century discovery of the fact that babies fed with a silver spoon were apt to be healthier due to anti-bacterial properties. It is for this reason Silver eating utensils have become the norm. Silver also has a long and critical role in industry as well, as the first telegraph message ever sent, “What have God wrought” was typed out by Samuel Morse on his telegraph made with Silver contact points.

Though Silver has its roots as a precious metal, core demand today is more from the industrial sector than the investment and “hoarding” segment.

Seasonal Overview:

Silver prices tend to follow the ebb and flow of the economy. During the first quarter of the calendar year, Silver prices generally increase, with February and March being the strongest as industrial production tends to be strong. The price of Silver will usually decline during the late spring and summer months as industrial production slows and the ease of transporting Silver increases in the summer months. Prices tend to strengthen slightly in the fall, as the electronics industry begins production of personal computers and electronics ahead of the holiday shopping season. During the late fall and winter months, Silver prices tend to decline as cold water ports will dump metals ahead of ports icing over.

Silver: (High: May or Sep//Low: Jun or Dec) The effects of the normal contango price structure are especially pronounced. With each successive contract priced at a premium to reflect carrying charges, rollover produces a deceptive "rally."

Chart courtesy of Moore Research Center, Inc.