The element silver, in the periodic table symbolized with Ag (for the Latin argentum) and atomic number 47, is one of the more precious metals used by mankind. It is a soft, white transitional metal and has highest electrical and thermal conductivity of any metal. The commodity silver is usually found as an alloy with gold and other metals, in minerals such as argentite and chlorargyte and in its pure form as native silver. The majority of silver produced originates from the refining of zinc, lead, copper or gold, where it is collected as a byproduct.
The metal is slightly harder than gold, but still very malleable. Despite its excellent electrical conductivity, copper is usually used in electrical applications, because of its lower cost. Silver is found in every continent in countries like Mexico, Canada, Peru, China, Bolivia, Poland and Australia. The top producer of silver in 2010 was Peru with 18% of the world’s total, followed by Mexico (16%) and China (14%).
Silver has been in use for thousands of years and was the basis for a lot of the world’s monetary systems. Only gold has been considered a more precious metal throughout history. From archeological evidence found around the Aegean Sea and Asia Minor, silver was being separated from lead as early as 5000 BC.
During the times of the Romans the stability of the economy and currency relied heavily on the supply of silver. Romans mined silver on such a massive scale that it was unparalleled before the discovery of the Americas during the 15th century. The amount of silver circulating in the Roman empire was estimated to be ten times larger than in the late dark ages.
The Making of Silver
Silver was first extracted in Mexico in the 16th century by a method called the patio process. It involved mixing silver ore, salt, copper sulphide, and water. The resultant solution was then extracted by adding mercury. This inefficient method was followed by the von Patera process. Here ore was heated with rock salt, producing silver chloride, which was leached out. Today, there are several processes used to extract silver.
Nowadays, the process called cyanide, or heap leach, is used to extract silver. Silver ore is crushed into small pieces, to make the material porous. Lime is added to create an alkaline environment. The ore must be completely oxidized so the precious metal is not confined in sulfide minerals. Where fines or clays exist, the ore is agglomerated to create a uniform leach pile. This process consists of crushing the ore, adding cement, mixing, adding water or a cyanide solution, and curing in dry air for two days.
Secondly, broken or crushed ore is stacked on impermeable pads to eliminate the loss of the silver cyanide solution. Pad material may be asphalt, plastic, rubber sheeting, and/or clays. These pads are sloped in two directions to facilitate drainage and the collection of the solutions.
The third step is adding a solution of water and sodium cyanide to the ore. The solution is delivered to the heaps by sprinkler systems or injected into the ore. The silver is recovered in several ways, but most common is Merril-Crowe precipitation, which uses zinc dust to collect silver from the solution. This is then filtered and melted into bullion bars.
Silver has been used in a alloy with gold to produce money from around 700 BC. In more recent history, silver was refined and coined in a pure form and it has been used by many nations as the basic unit of monetary value. The name of the pound sterling was chosen because it represented the value of a troy pound of sterling silver. After large deposits of silver were found in the Americas in the age of discovery, silver decreased in value and most countries adopted to a gold standard by the 19th century. Some countries, like Canada, still issue silver bullion coins.
Silverware and Jewelry
Silver is traditionally used in jewelry and silverware as an alloy called sterling silver (92,5% silver, 7,5% copper). Jewelry made from sterling silver is usually covered with a coat of 99,9% pure silver for a shiny finish. Gold is sometimes used for this plating as well. It is almost always present in carat gold alloys, giving greater hardness and a whiter finish. White 9k gold contains 37,5% gold and 62,5% silver, while 22k gold contains only around 8% silver.
One of the biggest areas where silver is used is in the electronics and photography industries. In the years before the millennium around 30% of all the silver consumed was used in silver nitrate and silver halides for photography purposes. Around 40% was used for industrial purposes at this time. Many electronics use silver for its excellent conductivity. Examples are radio frequency connectors, printed circuits, RFID antennas and computer keyboards. Tiny batteries, used in watches and other small devices, use silver oxide for long life and high energy to weight ratio.
When a mirror needs superior reflectivity, the reflecting material will be made from silver. Silver and sometimes gold can be applied to glass at various thicknesses for different amounts of light to penetrate the mirror. Common mirrors are backed with aluminium though. Silver is also the choice for the reflective coating of solar reflectors.
Silver trading takes place mainly on the COMEX, which is a division of the New York Mercantile Exchange(NYMEX). Here the future contract specifications are settled and prices are discovered.
In comparison to the gold market, the silver market has fewer participants. This results in a limited number of players owning a large share of the market. Any of these big players can therefore have a significant impact on market developments.
A similarity between silver and gold is that it’s both used as protection against economical instability. Although gold is more effective as protection, silver similarly retains a certain value regardless of the economical situation of the world or a country.
As silver is largely used for industrial use in electronics, the demands for that industry can also serve as an indicator for futures prices. Monitoring these industries can therefore form an important aspect of calculating and predication price movements.
NYMEX Silver Futures Contract
A Silver Futures Contract on the New York Mercantile Exchange (NYMEX) has the following specifications:
|Contract Size||5,000 troy ounces|
|Price Quotation||U.S. Cents per troy ounce|
|Contract Months||January, March, May, and September|
|Tick Size||$0.005 per troy ounce|