Silver is the second most popular investment metal in the world (after gold) and boasts a remarkable set of chemical properties that make it ideal for industrial application. For investors, silver often serves as a source of diversification or easy entry into tangible assets. Even among other precious metals, silver has a unique place.
Silver Is Not Mined Like Other Precious Metals
One particularly unique (and initially perplexing) aspects of silver is that modern mining operations rarely target it. Although some silver-specific mines do exist and are prolific, much of the silver coming out of the earth is merely a byproduct of other mining process. Normally, new silver emerges during the purification of copper, lead, and zinc. Some silver can be found near gold deposits, which means some lucky gold miners get some silver thrown in as a bonus.
Purification usually takes places in the form of “flotation” processes, after which smelting occurs to melt the disperse fragments into manageable chunks. Other extraction techniques include the amalgamation process and the cyanidation process, which involve crushing and chemically dissolving away other metals, respectively.
(Some mines also use the Parkes Process, whereby zinc-laden hot lead can be used to find and fuse with silver in any given piece of ore. Once the zinc-lead finds the silver, it can be distilled away from its host.)
Silver Restoration and Manufacturing
Although humans have mined and melted silver for more than 6,000 years, the first widespread commercial (in the modern sense) use of silver occurred in Mexico during the 1500s. At the time, silver miners used the “patio” method of mixing bits of silver with salt, water, and copper sulphide. While inefficient, it created a silver chloride which bonded to mercury and could be manipulated thereafter.
Silver restoration used to be very arduous. Today, however, silver’s handy bonding process with zinc helps speed things up. Using the Merrill-Crowe precipitation method, fine zinc dust can be applied to a silver-cyanide solution to literally condensate the silver through a filter. Once gathered, it can be melted and made into jewelry, bars, coins, or industrial products.
Silver Metal and Alloys
Silver can be worked and manipulated through rolling or forging, but the metal always re-crystallizes once it cools down. This makes silver fragile and easy to scratch or chip. To protect the otherwise soft metal, silver processors add other stronger metals to form silver alloys.
By far the most popular silver alloy is sterling, or 92.5% silver and 7.5% copper. This was the “gold” standard of silver currency for hundreds of years, thanks in part to its widespread use across the British Empire during the 18th and 19th centuries.
For non-currency use, a 60-70% alloy is more popular, particularly in dentistry. Telephone relays and circuit breakers use a 60-40 split between silver and palladium.
Among IRS-approved investment metals, only “fine” silver of 99.9% (or .999) is allowed.
How Investors Can Take Advantage of Silver
Many silver bars and coins qualify for Self-Directed IRA inclusion, which means investors can protect their portfolio while staving off the tax man, too.
You can own real, physical silver bullion and store it in a tax-advantaged retirement vehicle. American Bullion can discuss your options and help you every step of the way. Our #1 goal is to help you take control of your own finances – and we promise to be transparent, safe, and efficient in the process.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.