Silver is a Monetary Commodity

In more than one language, 'silver' is the same word as 'money'. Silver is a store of value in the face of dollar destruction, and has been termed the poor man's gold but silver's price is more volatile that the price of gold, which can result in greater profits... or losses, in a short period of time. Always, caveat emptor (let the buyer beware) but the price of silver will not go to zero because it has monetary value as coinage, retail value as jewelry and silverware, and industrial value.

Silver for industrial use is greater than that of the silver used for monetary applications, so supply and demand for commercial use of silver plays a part in the value of silver, in addition to market speculation by investors.

Silver has the highest light reflectivity and sensitivity. It is chemically reactive and highly resistant to corrosion, in addition to being malleable and ductile. Because of these qualities, silver will always be in demand, with more than half for industrial use followed by jewelry and silverware. Demand for minted silver bullion is high and over the past few years, the mint has briefly halted sales to catch up with demand for silver bullion.

Silver Coins as Legal Tender

The Greeks were among the first to use silver as a coinage in the drachmas which were popular trade coins throughout the Greek empire. American silver coins (pre-1965) have more silver content than coins minted today, and are still in circulation as legal tender for trade and commerce, but more so as junk silver and collectible coins due to the higher silver content as a store of value and a hedge against inflation, deflation and currency devaluation. Visit our 'Coins' page for the percentages of silver in US minted coins.

US Silver Coins

Legal and lawful tender coins of the United States are minted as coinage for the purpose of conducting trade and commerce as set forth by and official act Congress, who has the only authority to coin money, through the Coinage Act of 1792. The first mint was in Philadelphia, which at the time was the capital of the United States. Today, the US Mint is headquartered in Washington, D.C. and the US Treasury mints coins at mint facilities in Philadelphia, Denver, San Francisco, and West Point and a bullion depository at Fort Knox.

Gold / Silver Ratio

The gold/silver ratio is how many ounces of silver it takes to buy one ounce of gold (divide the price of gold by the price of silver). In the nineteenth century the US government failed in its attempt to institute a bimetallic standard for gold and silver coins in circulation at the fixed exchange rate of about 15-16:1. The price fixing proved unworkable. Look for silver to fall more than gold in a bear market, and outperform gold in a bull market (precious metals bull market, that is) but the gold/silver ratio cannot predict if the price will rise or fall.

In ancient times, 2 oz. of silver could buy 1 oz. of gold but in 1991 the ratio was 100:1 making silver a very inexpensive investment. The higher the ratio, the better the buy, in silver.

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