Silver Historical Background

Silver has attracted man’s fascination for many thousands of years. Ancient civilizations found silver deposits plentiful on or near the earth’s surface. Relics of these civilizations include jewelry, religious artifacts, and food vessels formed from the durable, malleable metal. This metal took on near mystical qualities in marking important historical milestones throughout the ages, and it served as a medium of exchange. The Mesopotamian merchants were doing just that as early as 700 BC.

In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nation’s coinage until its use was discontinued in 1965. The dawn of the 20th century marked an important economic function for silver, that of an industrial raw material.

Today, silver is sought as a valuable and practical industrial commodity as well as an appealing investment precious metal. Many countries now issue silver bullion coins, among them the Unites States, Canada and Mexico. Private issue silver bullion is also available from select private mints.

Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals. The largest silver producing countries are Mexico, Peru, the United States, Australia and Chile. Sources of silver include; silver mined directly, silver mined as a by-product of gold, copper, lead and zinc mining, and silver extracted from recycled materials, primarily used photographic materials. Today, silver bullion stocks make up a significant component of silver supply.

The American Eagle Bullion program was launched in 1986 with the sale of gold and silver bullion coins. Platinum was added to the American Eagle Bullion family in 1997. A bullion coin is a coin that is valued by its weight in a specific precious metal.

The Precious Metal Silver in Bars and Rounds

Silver is known as a precious metal and much, much more. This metal of ancient civilizations and of modern technology has been used as a medium of exchange through the ages, and is an important investment metal with a variety of industrial uses.

Silver Bullion Bars and Coins
Bullion is the form of silver traded for investment purposes. From silver metal, coins or rounds, bars, and ingots are struck or cast to form a physical product that is bought or sold on the basis of the silver content.

Government Minted Silver Coins & Silver Bags
American Eagle silver coins and Canadian Maple Leaf silver coins are the most popular forms of investment in government minted silver bullion. As a trusted retailer for both, we offer these products at very competitive pricing. Silver bags are a common trading medium and contain 54 pounds of mixed United States silver coins with a silver content of 90%.

Pan American Silver Bullion
Pan American Silver is a world leader in the production of new silver. Pan American Silver bullion that has been refined to .999+ purity. This silver bullion is struck in one ounce rounds and several sizes of bars.

Silver Uses

Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals. The largest silver producing countries are Mexico, Peru, the United States, Australia and Chile. Sources of silver include; silver mined directly, silver mined as a by-product of gold, copper, lead and zinc mining, and silver extracted from recycled materials, primarily used photographic materials. Today, silver bullion stocks make up a significant component of silver supply.

The demand for silver comes primarily from three areas; industrial uses, jewelry and silverware, and photography. These industries represent 95 per cent of annual silver consumption. Silver’s superior properties make it a highly desirable industrial component in manufactured products. Silver’s artistic beauty and status make it one of the most romantic and sought after precious metals.

Diversity is silver’s primary asset. Its unique properties include beauty, strength, sensitivity to light, malleability and ductility, electrical and thermal conductivity, reflectivity and the ability to endure extreme temperature changes. These properties allow groundbreaking research to be conducted by scientists and engineers that effect the way we live.

Silver more than other precious metals, has significant demand rooted in sectors as diverse as imaging, electronics, jewelry, coinage, superconductivity and water purification. For this reason, silver is no longer known as just a precious metal, a store of value, a work of art or an industrial metal. It is all of these. Today silver is indispensable, working all around us to improve the quality of our lives.

Demand and Supply in 2005

Demand
Total silver fabrication demand, led by surging industrial demand, rose to its highest level in 2005 since 2001. Total silver fabrication rose by 3 percent in 2005, to 864.4 million ounces (Moz), its highest total since 2001. Industrial fabrication contributed the most to the increase, with its sharp 11 percent rise (41 Moz) to record levels of 409.3 Moz - growth that has taken its share of total fabrication to 47 percent from 37 percent ten years prior. Indian off take in industrial fabrication rose an outstanding 58 percent last year, while Japan experienced a 15 percent increase in 2005. China posted an impressive 6 percent increase in industrial demand to reach 31.8 Moz. The United States topped 100 Moz. Electrical and electronics demand, with its 10 percent rise globally, accounted for much of the industrial category's growth.

Despite higher silver prices, jewelry and silverware fabrication posted a modest increase in 2005, to 249.6 Moz. Much of the growth occurred in China and India. Chinese silver jewelry and silverware demand rose by a stunning 20 percent in 2005, to 16.4 Moz. Indian fabrication for this category rose by 8.5 percent to 48.9 Moz in 2005 while North America experienced its fourth successive year of growth

Gold Historical Background

Gold has a long and complex history. From gold’s first discovery, it has symbolized wealth and guaranteed power. Gold has caused obsession in men and nations, destroyed some cultures and gave power to others.

Archaeological digs suggest the use of Gold began in the Middle East where the first known civilizations began. The oldest pieces of gold jewelry Egyptian jewelry were found in the tomb of Queen Zer and that of Queen Pu-abi of Ur in Sumeria and are the oldest examples found of any kind of jewelry in a find from the third millennium BC. Over the centuries, most of the Egyptian tombs were raided, but the tomb of Tutankhamen was discovered undisturbed by modern archaeologists. Inside the largest collection of gold and jewelry in the world was found and included a gold coffin whose quality showed the advanced state of Egyptian craftsmanship and gold working (second millennium BC).

The Persian Empire, in what is now Iran, made frequent use of Gold in artwork as part of the religion of Zoroastrianism. Persian gold work is most famous for its animal art, which was modified after the Arabs conquered the area in the 7th century AD.

When Rome began to flourish, the city attracted talented Gold artisans who created gold jewelry of wide variety. The use of gold in Rome later expanded into household items and furniture in the homes of the higher classes. By the third century AD, the citizens of Rome wore necklaces that contained coins with the image of the emperor. As Christianity spread through the European continent, Europeans ceased burying their dead with their jewelry. As a result, few gold items survive from the Middle Ages, except those of royalty and from church hordes.

In the Americas, the skill of Pre-Columbian cultures in the use of Gold was highly advanced long before the arrival of the Spanish. Indian goldsmiths had mastered most of the techniques known by their European contemporaries when the Spanish arrived. They were adept at filigree, granulation, pressing and hammering, inlay and lost-wax methods. The Spanish conquerors melted down most of the gold that they took from the peoples of this region and most of the remaining examples have come from modern excavations of grave sites. The greatest deposits of gold from these times were in the Andes and in Columbia.

During the frontier days of the United States news of the discovery of gold in a region could result in thousands of new settlers, many risking their lives to find gold. Gold rushes occurred in many of the Western States, the most famous occurring in California at Sutter’s Mill in 1848. Elsewhere, gold rushes happened in Australia in 1851, South Africa in 1884 and in Canada in 1897.

The rise of a gold standard was meant to stabilize the global economy, dictating that a nation must limit its issued currency to the amount of gold it held in reserve. Great Britain was the first to adopt the gold standard in 1821, followed, in the 1870s, by the rest of Europe followed. The system remained in effect until the end of the First World War, after which the US was the only country still honoring the Gold Standard. After the war, other countries were allowed to keep reserves of major currencies instead of gold.

The Precious Metal Gold

“We have gold because we cannot trust Governments.” President Herbert Hoover
The symbol of kings and the treasure of nations, desired by all but possessed by few, gold has been cherished for all of recorded history. In the 5th century B.C., Aristotle pondered the question of the perfect medium for money. He concluded that gold is perfect money for 5 reasons:

Durability
Gold won’t rot, break, crumble, decay, corrode or tarnish. Gold is unaffected by air, water, and even most acids.

Convenience and portability
A lifetime of wealth will fit in your pocket.

Divisibility
Gold can easily be divided into smaller amounts. An ounce of gold can be split 100 or even 1000 times.

Consistency
One ounce of pure gold is exactly the same as any other ounce, enabling worldwide trade and liquidity of gold – unlike unique items of jewelry or artwork.

Demand
Gold has a staggering variety of uses, even more today than in Aristotle’s time. Its unique properties keep the demand high and the relative scarcity of the metal insures continued value.

Gold is still perfect money, perhaps more perfect money than money. Gold remains the time-honored standard of wealth that no other currency can match.

Gold Uses
Gold is an ancient metal of wealth, commerce and beauty, but it also has a number of unique properties that make it invaluable to industry. These properties include:

• Resistance to corrosion
• Electrical conductivity
• Ductility and malleability
• Infrared (heat) reflectivity
• Thermal conductivity

Gold’s superior electrical conductivity, malleability, and resistance to corrosion have made it vital to the manufacture of components used in a wide range of electronic products and equipment, including computers, telephones, cellular phones, and home appliances.

Gold has extraordinarily high reflective powers that are relied upon in the shielding that protects spacecrafts and satellites from solar radiation and in industrial and medical lasers that use gold-coated reflectors to focus light energy. And because gold is biologically inactive, it has become a vital tool for medical research and is even used in the direct treatment of arthritis and other intractable diseases.

The demand for gold in industry is steady and growing. The supply of gold from stored inventory and from mining operations is limited and will remain so. Demand from investors who want to posses this precious metal is steady, and increases during periods of world crises or instability. The result is a market with much more upside potential than down.

Gold is an excellent hedge against inflation, and protects earnings for the future. Modern investors can invest in gold the traditional way — by purchasing gold bullion in the form of bars or coins — or they can trade in gold or gold futures electronically, or by investing in gold mining or refining companies.

Brief history of Forex trading

Initially, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged establishing more generally accepted means of exchange at a fairly early stage in history, to set a common benchmark of value. In different economies, everything from teeth to feathers to pretty stones has served this purpose, but soon metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.

Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental lOtis (I owe you) gained acceptance during the Middle Ages. Such lOUs, often introduced more successfully through force than persuasion were the basis of modem currencies. Before the First World War, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.

At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.

In the latter stages of the Second World War, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GA TT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilizing monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.

The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following President Nixon’s suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.

The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.

But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Eumpe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.

The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.

But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD1,200 billion is traded every day, far more than the world’s stock and bond markets combined