Throughout history, silver has had the unique and dual role as both an industrial metal and a monetary metal that is used as currency. In fact, it has been in circulation as currency for even longer than gold. If gold is the money of kings and bankers, then silver is truly the money of princes and the people. As with any asset, understanding the silver price history is critical to assessing its potential value in the future and why FirstGold™ believes saving in silver is essential for a smarter saving strategy.
Silver Price History: England’s Pound Sterling and America’s Silver Dollar
Silver price history has a glorious tradition set in the early days of the world economy in London. Before gold was even thought of as the primary mode of Western currency, silver was the cornerstone of the British economy. The Pound Sterling was not simply a name; it was a literal description of currency: a pound of sterling silver. England thrived on what was essentially a ‘silver standard’ of economic stability.
In 1663, England began a new era of dual currency with the introduction of the Guinea, and silver price history entered into a time where the two coins wavered in value against each other, as any stable economy should allow.
However, this state of economic health did not continue for long because Sir Isaac Newton, then Master of the Royal Mint, decided to reevaluate silver against the value of gold to the ratio of 15.5:1. Newton had hoped to stabilise the gold/silver value fluctuation, but he had failed to take into account that the price of silver and gold relies largely on the forces of supply and demand. This price fix created inequality in the market, and soon the use of silver as common currency began to decline as it simply lost its worth as reliable currency.
Moving across the Atlantic, America also had its financial beginnings with silver as the primary currency. Large deposits of silver found in Mexico meant that there was no shortage of raw material, and America backed its economy with a combination of both gold and silver coins that operated in healthy competition. In fact, during many points in the silver price history of America, silver coins actually overpowered gold coins to become the most valuable currency. However, this state did not continue forever, as the great Californian, Spanish, and Australian gold rushes eventually pushed silver further and further out of prominence and eventually, as in England, gold took over as the economic standard.
In this way, silver price history was temporarily halted as the previously great measure of wealth disappeared from the international economy. By the 1900s, silver had been completely removed from common circulation.
Early 20th Century
Silver Price History: US 91¢ per ounce
Although silver had been removed from the economy, silver price history was by no means over. This was the beginning of the modern age and with it brought a new demand for silver. It was soon clear that silver was going to be an essential part of the new era of industry and manufacture. This upswing was spawned not only by the rebuilding of Europe and Japan, but intense worldwide growth in electrical generation, transmission, and appliances, as well as the birth of mass-market photography, all of which used large quantities of silver.
Despite this, the silver price history did not see the sharp increase that such growth in demand implies, as the United States Treasury met the new demand by selling off its stockpiled reserves of silver, thereby increasing supply. This move artificially prevented the market value of silver from rising above its monetary value of US$1.29. Without the release of these reserves, the silver price would have grown sharply as supply from markets and mining would not have been able to keep pace with the increase in demand.
Silver Price History: US 91¢ - $2.57↑ per ounce
With this massive dump of silver stocks onto the market, the Treasury soon realised that it could run out of silver unless it took action to phase silver out of currency. It thus took a number of drastic measures to do just that, resulting in reduced demand on the Treasury’s remaining silver reserves and stopping silver bullion sales at the previously fixed price of 91 cents.
The silver price now grew rapidly to the $1.29 monetary value of silver, though the US Government still prevented any massive hikes by ensuring that a steady supply of silver still reached the market until its program of eliminating silver from currency was fully in place.
The market manipulation of silver by the U.S. government in the 1960’s caused investors to take a keen interest in silver. Concluding that the price of silver would skyrocket once the Treasury stopped supplying the market with such large quantities of silver, smart investors quickly bought any silver that became available.
The investment demand resulted in the silver price rising from US$1.29 to a peak of $2.57 in 1968, before softening a little as demand began to drop. The rise and fall in the silver price history was coincidental with the volume of these investor purchases.
The Turbulent Seventies
Silver Price History: US $2.57 – $5.40↑ per ounce
By 1971, U.S. Government had succeeded in removing silver entirely as a monetary currency, and stopped intervening in the silver market. While the availability of silver on the market dropped to record lows, the decade saw a great deal of volatility in market demand due to a short worldwide recession, cyclic demand for consumer goods using silver, and reduced use of silver due to high prices.
In any case, total new silver supplies fell short of meeting the required demand. However, the investors that had anticipated the shortage and that had been accumulating silver for the past decade now replaced the U.S. Treasury as the source of silver to make up for a major, ongoing shortage of silver; the price had reached a high enough level to sell their silver holding and take the ensuing profit.
The Wild Ride of 1979-1980
Silver Price History: US $5.40 – $49.45 - $10.80↓ per ounce
Now a part of investment folklore, 1979 saw a meteoric rise in the silver price almost solely due to a single private source. Seeing that owning silver was a safe, smart and secure investment, some billionaires known as the Hunt Brothers formed a company along with two wealthy Arabian businessmen to, in effect, corner the silver market. By buying up silver in enormous quantities as a hedge against the rapidly weakening dollar, in a short period of time they owned almost half the world’s silver not held by governments.
By driving the silver price up artificially, they created an economic situation that enraged financial industry insiders, large silver retailers, and the public. Iconic jewellery giant Tiffany’s took out a full page ad in The New York Times to demonstrate against the Hunt brothers and publicly decried their actions, stating “We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver.”
It was this crisis that caused the most infamous incident in silver price history. Known as Silver Thursday, a combination of bad debts, changed exchange rules, and panic on Wall Street in effect annihilated the Hunt Brothers’ monopoly over the silver supply and crashed silver market prices. It was a victory for those who supported a free and fair marketplace.
1980’s to Today’s Bull Market
Silver Price History: US $10.80-$34-35↑
Since the 1980s, the world has come realise that 30 years ago, the Hunt Brothers were smart enough to recognise that silver has always been a solid and reliable investment. Slowly the world’s economists and investors are repositioning themselves as silver advocates, as it is one of the few investments that retains its value. Silver price history has held strong and the price has gone up and up and up. Especially between 2000 and 2012, the price of silver has been of particular interest to savvy financial experts who see that the silver price history is going to play a large part in determining our economic future. Given today’s bull market, there has never been a better time to invest in silver through FirstGold™.
Current Trends in Silver Prices
A Market Overview: As of 2023, the price of silver continues to be a focal point in the global financial landscape, influenced by a multitude of factors spanning economic indicators, market sentiments, and geopolitical events.
Recent Performance: In recent months, the price of silver has displayed notable volatility, responding sensitively to various market stimuli. Fluctuations in the stock market, shifts in central bank policies, and geopolitical tensions have all contributed to the oscillations in silver prices.
Global Economic Conditions: The ongoing recovery from the effects of the COVID-19 pandemic remains a significant driver in shaping silver prices. As economies strive to rebound, the demand for industrial metals, including silver, experiences fluctuations in response to changes in manufacturing activities and supply chain disruptions.
Investor Sentiment and Inflation Concerns: Silver, often considered a haven asset alongside gold, tends to attract investors during periods of economic uncertainty. The concerns surrounding inflationary pressures, supply chain disruptions, and geopolitical instability have influenced investor sentiment, impacting the demand for precious metals like silver.
Industrial Demand: Beyond its role as an investment asset, silver maintains a crucial position in various industries. Its applications in electronics, solar panels, healthcare, and other sectors continue to contribute to its demand, thereby affecting its price dynamics.
Future Projections and Factors to Consider: Analysts and market experts offer varied perspectives on the trajectory of silver prices. Projections often consider factors such as the pace of economic recovery, global supply and demand dynamics, government policies affecting monetary stimulus, and the evolving geopolitical landscape.