The table on the left shows the sales figures for the American Eagle Silver Bullion and the fact that the demand for it has risen by more than 400 % over the last 6 years does not mean that the prices of silver has risen in the same perspective, but it however has increased from +/- $ 12.50 in 2007 to +/- $ 20.00 this year which shows a steady trend of increment of 10 % / annum. Analysing the demand for the American Eagle Silver Bullion Coin sales figures, gives us an insight of how the economy is fairing.
Just like gold, a sudden paramount increase in the prices of silver is an unhealthy sign of the economy, however the steady increase of the prices of silver that is matched by the rise in demand tells us that the economy is sailing on calm waters. The fact that the prices of silver and gold are linked closely to inflation and the destruction of the all mighty dollar is not as correct theoretically as most of us are led to believe because inflation could also be easily fuelled as governments increase their money supplies to pay of surpluses which
happens frequently because governments print money irresponsibly for short term
commitments while their GDP output remains status quo.
These frequent occurrences over the past 2 decades whereby governments print large
amounts of paper currency to offset their deficits eventually remit their countries of into the
void of hyperinflation. It is somewhat a common belief that when interest rates are
decreased or in the even the governmental budgets are running on deficits the value of
money for that government falls rapidly and that the best defence to overcome the problem
is if these governments buy gold or silver to stem the loss of their currency’s purchasing
This belief is blurry in definition because in a practical sense based on the inflation hedge
theory this not only brings about the loss in purchasing power because of increase in
prices of basic goods, but it also affects the currency in the global arena due to the
differences in exchange rates that become unfavourable to those who are holding the
dollar and the lack of demand for that currency sends the value spiralling down even
The reason for all this is due to the fact that both gold and silver are used by mining
companies for contracts as well as manufacturers of end user products and products using
silver in industrial materials speculate on the precious metal as part of their risk mitigation
policies making or turning silver into an investment portfolio.
The biggest industrial use for silver is in the photographic, jewellery, and electronic entities
of the world. Electronics have become the centre of most other industries such as
automobiles, entertainment and communications which makes silver in essence a much
more stable precious metal due to the adequate quantity that it is found in. Mexico, Peru
and China are the biggest silver producers in the world.
About this article: M.A.K Precious Metals Australia is a Melbourne Gold Buyer and Refiner.
For more information please visit their website at www.makpreciousmetals.net.au.