Silver as a Global Currency

Silver and gold have traditionally been the two key precious metals, which are currency based. Both may be traded against the US dollar, and in fact both used to be the basis of value for the US dollar (not true today). In a global sense both still are the basis for currency value, such as the British sterling pound silver.

By most analysis silver and gold are both expected to be good investments for continued financial gain. Silver does tend to be a bit more volatile in the investment commodities markets for reasons, which are debated by analysts. The need for silver as an industrial metal (up 44% since 1998) has been forecast by many to be a stronger market than gold.

This is one of the reasons for the silver market volatility. Even though the demand is high, some of the more traditional silver consumers, such as the photo industry and silverware, have actually declined resulting in a silver surplus. That residual is not making it to the investment marketplace. Metal mining production is stable, although base metal reserves are dwindling. Silver, being a by-product of copper, zinc and lead extraction, has also somewhat benefited from the increased demand of those metals. In 2008 silver was at a high of $30US an ounce, declining to $7US an ounce and bouncing back to 12$US an ounce early in 2009. That demonstrates a volatile market.

Traditionally, silver usually follows gold in the market place, but has not followed gold as closely in 2008. The decline of silver recently has more followed the decline in the US dollar. Some analysts believe that a global currency will follow, with silver and gold both rebounding as equilibrium currencies.