Silver’s intrinsic value as a precious metal has led to its use in coins and investment bullion throughout history. More recently, economic uncertainty, political tension, worries over currency devaluation and dwindling supplies have greatly boosted silver’s investment appeal.
The rise of silver Exchange Traded Funds (ETFs) and dramatically increased minting of silver coins have provided much better access to silver as an investment tool. Annual sales of US Silver Eagle coins nearly quadrupled from 2000 to 2013 (over 42.4 million sold in 2013), with 37.7 million sold in 2016 and a decrease to over 18 million in 2017. Sales of Canadian Maple Leaf coins have increased from 403,000 in 2000 to over 32 million in 2016.
Part of silver’s appeal is its affordability compared with gold. At current prices, the gold/silver ratio is about 80:1. Over the past 20 years, the ratio has ranged from over 90:1 in 1993 to just over 30:1 in 2011. But historically the ratio has dipped as low as 15:1 (1840 and 1980) to nearly 100:1 (1940 and 1990). The long-term historical average is around 27:1. Bullish silver investors point to the current high ratio as a strong indication that silver prices will rise further in the coming years.
Overall, we believe the long-term trend for silver is bullish. The main drivers will be investment demand and silver’s increasing industrial usage—especially in solar panels and emerging technology.