Monday, November 15, 2010

The Climbing Price of Silver

If you listen to the news, either TV or radio, you may have noticed that the price of silver has been shooting upward. Like a rocket.

Bad news.

Because an increase - especially a dramatic increase like we've seen recently - translates into more expensive silver beads and findings. Sterling silver, fine silver, silver metal clay, and even the silver plated items - will all be going up.

So - what's causing this increase in silver that we will be having to pay for? Did Peru and Mexico suddenly shut down all their silver mines? (Peru and Mexico are the two top world producers of silver.) Is there some massive plot to control the weather by seeding clouds with silver iodide to produce rain that is causing governments to buy up silver to restrict access? (Silver iodide is what is used in cloud seeding.)

Ha!

Googling for silver prices reveals that most of the hits on silver have more to do with investing than jewelry. And herein lies a clue.

From what I can make of some of the reports I have found, a general fear of inflation is causing some people to buy gold and silver. Thus driving the prices up. Which, isn't that the definition of inflation?

However, a reliable source inside the investment industry has opined that this is an adjustment that is long overdue to bring the price of silver back in alignment with the price of gold. Historically - they have a well-defined price-relationship.

Now, I have no problem with gambling as entertainment - which some folks like call "investing" - but it isn't. Wired magazine recently reported "one of the big trading firms just announced its average hold time on a stock was 11 seconds." I concur with the assessment that follows - that's not investing - that's gambling.

But what this gambling on the price of silver means to you and me is that: we're are already paying more for silver, and our suppliers have increased their prices - some by 30%.

So - sorry - but if we don't match those price increases - we can't afford to restock - so silver will be going up. We do expect to see more white metal alternatives coming along soon - and we will be picking them up if we think the quality is decent (and that they aren't made of something nasty, like lead). For instance - I have a box of zinc beads here to process. That should be interesting.

In the meantime, you might want to participate in a little gambling of your own, by buying silver now for use later - hoping that the price will continue to rise and you will feel smug every time you put a sterling toggle on a bracelet. Or maybe you'd prefer to sit tight with what you have, and hope that the late Friday downtick in the silver price turns into a trend?

Or perhaps you can cultivate a fondness for copper jewelry instead?

At least - it makes the price of all that over-the-top crystal stuff I design look reasonable!


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References:

Gold and Silver Rally on Rising Inflation Expectations
Wired, November 2010. "The Big Score", pg 173.
Kitco.com

1 comment:

Susanna Originals said...

I blogged about the same thing last week, trying to decide whether to strain my credit card for silver now or wait until I needed it. Silver is used in electronics and demand was starting to outstrip the supply until the recession. Now that people are starting to buy again, the demand is high and it looks like prices will continue to rise. Some pundits are forecasting that it will rise to $100 an ounce!
I do a lot of wire wrapping and chain maille, so I bit the bullet and ordered. A lot. Time will prove whether or not I was smart or just jumped the gun.