One item of paramount importance to nearly everyone is war. According to data in the early 1980’s, the U.S. military used more than 5,000 items containing silver, ranging from a naval torpedo using 4,161 ounces of silver to the smallest relays using less than 23 grams. The Defense Department has acknowledged that there are over 150 different kinds of bearings containing silver. The Defense Department also states that over 100 different kinds of batteries containing anywhere from a few grams to over 1000 ounces of silver are used in military applications.
A good amount of silver is used in jets, ships, submarines, and rockets. Silver is used to provide bonding of titanium and stainless steel. In most military applications it is necessary that all equipment work accurately and reliably. Only silver enables this military hardware to meet these requirements.
At one time an official government report stated:
“The increase in the use of precious metals in both military and civilian commodities has been phenomenal. Indications are that this use will continue or increase in the coming years.” At the time, President Regan had pledged to build the MX missile, which would have required massive amounts of silver for backup battery systems.
According to “Silver Profits in the Eighties” by Jerome Smith, a very interesting condition was mentioned. “In the event of a major war, no matter how much per ounce it would be willing to pay, there is no way that the U.S. military could purchase the silver it would require for such a conflict. Using the estimated silver usage during WWII, all the available silver bullion in all commodities exchanges and in private stockpiles worldwide would only satisfy the national need for two years. After that ….?” 1
Silver Fundamental to Peace
In the rapidly expanding technology-based world we currently live in, three facts about silver make it imperative to technology and in particular the electronics industry. Silver conducts electricity more efficiently than any other metal. Silver conducts heat more efficiently than any other metal. When it oxidizes in air, it does not form an insulating coating like most other metals.
Most electronic applications use only a small amount of silver. For example solar cells are crisscrossed by silver wire. The cost of silver for plating switch contacts is less than perhaps 5% of the total cost.
In medical and dental applications the cost of silver in relationship to the professional service is trivial. A silver dime would provide enough for four average size fillings for example.
The sterling silverware industry does require a great amount of silver relative to the end product. In this industry, the cost of silver does represent perhaps 20% of the final cost. The jewelry industry also needs a high percentage of silver to the end product. Unfortunately, the true quality of silver jewelry has come into question recently. [See Silver Swindle!]
Silver Fundamental to Industry
Industries that use silver do so because they have to. In almost every case, silver has characteristics that are vital to the product. In most situations, the usage is tiny relative to the finished product. The cost of the metal is insignificant in relationship to the importance of the final product. Modern industry cannot sustain itself without silver.
Many new uses have been reported in medicine, power generation, environmental cleanup, and a host of others.
Silver Fundamentally Price Inelastic
Silver is what economists call price inelastic. With most products, if the price increases, the production will increase. Conversely, if the price goes down, production will decrease. Since silver is largely a byproduct of the production of other metals, it does not respond to the market price in this normal way.
For example: A lead/zinc mine might receive 80% of its revenues from lead and zinc and only 20% from silver. Now assume the price of zinc and lead both double. This would be incentive to increase mine production. However, assume that the price of lead/zinc fall substantially and the price of silver doubles. To increase the production of silver, you would also be increasing the production of lead and zinc. This oversupply should cause prices to decrease. In other words, do you speed up production to respond to the higher silver price? Only if you can absorb the increased production of lead and zinc at a profitable price.
So the production level of silver depends not so much on its price, but on the market price of the associated base metals. The production and consumption of base metals, which are primarily demanded in the automotive and electrical industries, are very dependent to business conditions. Demand for lead, zinc, and copper and their rate of production drops more sharply than silver consumption in a recession or depression.
Cheers Ralph
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