Silver as a Precious Metal

Silver is not something that most investors pay a lot of attention to. It’s very common that whenever there is any mention of precious metals most humans focus their attention towards gold. But as opposed to the market of gold, in the market of silver there are not any big time players. Why is this a good thing? Well, it can be considerably important because it means that there is not any big projection that will come into the market and smother the price. However it is known that Warren Buffet, who just so happens to be one of the world’s greatest investors, purchased 129.7 million ounces of silver bullion in 1997 therefore this can be one of the exceptions in this case.

Something that is very true and certain about silver is that the demand has outdone the supply for over fifteen years and this all started in 1990 and continues on. It is believed also that this will continue to be so within the next number of years. Yearly supply deficits have gone up to a shocking two hundred million ounces in really good years and have gone down to a low forty million in other years. One thing to keep in mind is that even in years where the demand of silver decreased, the annual basis of the mining supply did not reach the demand. A deficit condition is therefore something very optimistic for an article of trade.

One thing to keep in mind is that a deficit does not mean that there is a shortage and that supply always needs to be the same as the demand. When people mention that there is a deficit it only means that the amount of a precious metal in this case does not meet the demand there was in that year or years. It is the difference of the silver that is being mined and the silver that is made to supply.

The silver stockpiles went up after the enormous increase in silver prices in the last phase in 1971 to 1980. The silver inventories went up at around one billion ounces in 1979 to 1989 above that that was already in the above ground inventories. This however and almost all the figures that have to do with silver inventories are not official though. Since 1990 though the above ground silver supply has been haggard down and it has been estimated that around 1.5 billion ounces of silver was used up from 1990 to 2005 by some of the silver studies done in the world.