Articles & Blogs - Silver Commentary

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A couple of months back, I did a short commentary on how silver's many (and increasing) applications would continue to drive silver demand higher, even without the massive demand for silver as a currency, and investment. I won't repeat anything said there, so for any who missed this originally, please see this previous piece (“Increasing demand for silver comes from MANY sources”).

As I noted previously, one of the areas where the “properties” of silver surpass those of any other metal is as an anti-bacterial agent. Another important application for silver is as a chemical catalyst, where (again) silver generally provides superior performance versus any comparably-priced agent.

What makes BOTH of these applications so interesting for those investing in silver is that because the silver is used in such small quantities (per unit), this silver is essentially “consumed” - as there is no way to recycle silver at such “trace” levels.

These two properties of silver are being used in new ways with an “old” product: polyester. While polyester's days as a “fashion statement” are thankfully in our past, polyester is seeing a dramatic revival in production, with clothing manufacturers having “re-discovered” polyester – as a superior material for a wide range of sports clothing.

As usual, my source for this latest information is the “Silver Institute”. In doing a 2009 update on silver demand, it provided considerable detail on the polyester “revival”. Polyester is found to be very effective for drawing away moisture from the skin, while also “breathing” (i.e. ventilating) well.

Despite these porous qualities, polyester is ALSO very effective in retaining warmth (for cold-weather applications) and offers excellent wind-protection. These combination of properties mean that polyester is becoming a fabric of choice for a wide range of sports-wear, which even in current economic conditions is still a lucrative market – and you cannot make polyester without silver.

The added bonus of this silver content is silver's superior anti-bacterial properties. For athletes, this means both a dramatic reduction in the build-up of bacteria, and (along with it) a dramatic production in the odor which is produced by bacteria. This makes polyester just as desirable for “elite” athletes as it is for recreational users.

In a span of just six years, from 2002 to 2008, global demand for polyester has increased by 250%. At current levels, this polyester production already “consumes” 1,200 TONS of silver per year, and this usage can only go higher over time.

As a reminder, there is another very important reason why these kinds of silver applications are so “bullish” for long-term silver demand. In any application which consumes a small quantity of silver (per unit), this means that silver is very price “inelastic”. For those who are not familiar with such economic jargon, what this means is that even large increases in the price of silver will have very little impact on demand – because even large price-increases in silver only result in small increases in the unit-prices of the products manufactured with silver.

To use polyester as an example, 1,200 tons of silver was sufficient to manufacture 20 MILLION tons of polyester. A doubling, or even tripling of the price of silver would have little to no impact on this production.

Similar ratios are found with many of the industrial applications of silver, and as I have mentioned in previous commentaries, there have been more new patents created which use silver than for any other metal. In other words, the future for silver is much brighter still.

While those holding silver as an investment continue to be victimized by the silver Manipulators over the short-term, these illegal tactics are simply encouraging more and more new uses for silver. Thus, the same price-fixing which is keeping silver at only a fraction of its real value today is causing dramatic over-consumption of silver – while current production declines.

This is a “recipe” for an explosive, “break-out” in the price of silver, which could very possibly be the catalyst for the annihilation of the “silver shorts”. The future for silver has never shone so brightly – all that remains in doubt is the timing of silver's huge, price-revaluation.

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