Silver is a precious and scarce metal with high intrinsic value. This fact explains its historical role as currency and its continued relevance as an investment asset. Since the industrial era, silver has grown in importance as a raw material, and its unique characteristics make it essential for numerous industrial applications, including the use of clean energy.

The scarcity and value of silver have always motivated the conservation and hoarding of the metal in its purest and heaviest forms, such as coins, bullion, silverware, and, to a lesser extent, jewelry. In the case of other manufactured products, the silver content may also have an inherent value related to the precious metal content. Together, these various forms of silver constitute the above-ground reserves of the precious metal.

To examine the relationship between the level and changes in above-ground stocks and the price of silver, the Silver Institute commissioned a new Market Trends Report, “Price Sensitivity of Above-Ground Silver Stocks,” prepared by Precious Metals Insights. 

The report argues that there is no correlation between the overall level of above-ground stocks and the price of silver.

Some of the key findings of this report are summarized below:

*There is no correlation between the overall level of above-ground stocks and the price of silver;

*Annual changes in total above-ground stocks and the price of silver are also uncorrelated;

*Conversely, movements in bullion stocks have an impact on the price of silver and vice versa.

*The vast majority of above-ground stocks are “immobile,” with only small net additions or subtractions from stocks on an annual basis;

*Increases in bullion stocks tend to be positively correlated with price, as investment demand grows when silver prices rise, further stimulating higher prices;

Bullion price declines over several years have tended to occur in bear markets for silver, exacerbating them. However, these declines have generally led to more substantial rebounds in silver as investors have rebuilt their bullion holdings.

Surface stocks of manufactured products are less price sensitive than bullion stocks. Only certain subgroups of silver manufacturing demand show price sensitivity, such as jewelry and silverware. 

To view the report, click here