Understanding Silver
Silver has a long history in coins and jewellery, but it also plays an important role in modern industry. Learn what makes silver useful, where its supply comes from and how it differs from gold.
What is silver?
Silver is a naturally occurring chemical element with the symbol Ag. It is valued for its appearance and its ability to conduct electricity and heat. Silver is used in finished products as well as in bullion bars and coins.
People have used silver in trade and coinage for centuries. Today, its price reflects a combination of investment interest and demand from businesses that use silver in manufactured products.
Where is silver used?
Industry
Silver is used in electrical contacts, electronics, solar photovoltaic technology and other industrial applications.
Jewellery and silverware
Silver is made into jewellery and household items. Their retail price can include design and manufacturing costs beyond the metal content.
Investment
Investors buy silver bullion as bars or coins, or use other products that provide exposure to silver prices. Each way of holding it has different terms and costs.
Where does silver come from?
Silver enters the market through mining and recycling. Some mines primarily produce silver. A substantial amount is also recovered while mining other metals, including lead, zinc, copper and gold.
This matters because a change in the silver price does not necessarily cause mines to produce more silver straight away. Output from a mine that mainly produces another metal also depends on that mine's wider economics.
How is silver different from gold?
Gold and silver can both be bought as physical bullion, but their markets are different. Gold has significant investment and central bank demand. Industrial use is a major part of silver demand, so developments in manufacturing and technology can affect its market.
Silver often has a lower price per troy ounce than gold. That does not mean it is automatically a better purchase or that buying and selling it is cheaper overall. The product price, dealing spread, storage and other costs still need to be considered.
Remember: More industrial uses do not guarantee that silver's price will rise. Demand, supply, investor activity and wider economic conditions can all change.
What forms can you buy?
Investment silver is commonly available as bullion bars and coins in different sizes. Weight and purity tell you how much silver a product contains. The price paid for a finished bar or coin may differ from the quoted silver spot price; a later lesson will explain why.
What comes next?
The next lesson introduces platinum, another precious metal with important industrial uses and its own supply and demand drivers.