Michael DiRienzo
Executive Director and Secretary
The Silver Institute
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Insight

Silver Market Can Still Spring a Few Surprises,

Wed, 10/21/2015 - 12:00

The first record of silver mining dates back to 3000 BC in Turkey and silver is still a driving force for mining and industrial applications around the world. “Silver is both a precious and an industrial metal, which makes it unique,” shares Michael DiRienzo, Executive Director and Secretary of The Silver Institute. “Throughout history, silver has changed lives from a health, wealth, and manufacturing standpoint. Some of the great Mexican cities exist because of the production of silver.” With modern techniques and breakthroughs such as steamassisted drilling, mine dewatering, and improved haulage and mine infrastructure, companies can now mine more than just exposed surface vein deposits, as was common practice prior to the 20th century. This facilitated record global silver mining production of 819.6 million ounces in 2013, making silver one of the most heavily mined metals in the world. Furthermore, since the discovery of the industrial applications of silver, it is no longer mainly mined as a precious metal, but rather for its everyday applications. Silver is the ultimate conductor of electricity and heat, acts as a natural antimicrobial agent, it is used in the production of ethylene oxide and formaldehyde for the plastics industry, in photovoltaic cells as silver paste, and is now also being used as part of airbags and rear view cameras in automobiles. Additionally, photography fans will be familiar with the use of miniscule silver crystals to create negatives. DiRienzo forecasts that silver will also increasingly be incorporated into textiles for health-related applications such as bandages, into walls and instruments in hospitals to prevent the growth of bacteria, and into water purification systems. “Other uses that will drive demand for silver include wood preservatives, superconductors, supercapacitors, food packaging, and auto-catalysts,” DiRienzo adds. However, these widespread industrial applications of silver are not commonly known, leading The Silver Institute to focus on creating programs that will stimulate more demand for silver, be it on the industrial side or in the exchange traded fund (ETF) side. To this end, DiRienzo travels around the globe holding conferences on the future of industrial silver demand, and presents the findings and research of the institute to industry leaders and the general public.

These awareness programs have refocused The Silver Institute, which began as a technical institution 42 years ago. The institute has now evolved into what DiRienzo calls a marketing arm for the silver industry. “We have been very successful in marketing the use of silver through the programs that we have initiated and run,” he explains. “This is why our member companies support us through sponsorships. These companies understand that if they do not market their services and products through a collective group, there is a danger of a slowdown in business prospects.” In line with its role as a market developer for silver, The Silver Institute today publishes the most comprehensive annual summary of the international silver industry, entitled The World Silver Survey

As well as promoting traditional uses of silver in jewelry and silverware, the institute also wants to improve investment in silver, including the sale of silver coins, bars, ETFs, and mining equity shares. In 2006, The Silver Institute worked with Barclays Global Investors to launch a silver ETF known as the iShares Silver Trust (SLV). “This trust opened up a whole new world for silver investment by democratizing the process in which somebody can invest in silver,” exclaims DiRienzo. Professional individuals who acquire silver are often industrial end-users who hedge silver and work with banks to get forward rates and forward deals on silver. “The rise of investment in silver over the last decade has a lot to do with the nature of the silver market. It is far more volatile than the gold market. Professional investors like that volatility since it shows life,” he adds.

Members of The Silver Institute include silver producers such as Fresnillo, Coeur Mining, Endeavour Silver, and Pan American Silver, end-user members such Tiffany & Co. and LeachGarner, and coin dealers such as Valcambi. It is thus in the interest of the members to promote an increase in silver through the promotion of its value as a precious and industrial metal. “The current silver price does not reflect its value. A fair price for silver would be between US$35-38 per ounce of silver,” DiRienzo expresses. According to DiRienzo, along with the Chinese market, the silver market in Mexico will continue to be a huge focal point for The Silver Institute in its aim of supporting the increase of silver supply and demand. The institute continues to target the general public, academia, government entities, and market participants, as well as providing all vital information necessary to fully understand the varied uses and investment opportunities for silver. “We send news releases that we publish to networks such as Marketwire and ABM Industries Newswire. We are finding that each press release gets more hits than the one before,” he says. Through these many avenues, The Silver Institute hopes to raise global understanding of silver and encourage its development and uses worldwide.