Email this article 
Hide
Show all
The Dichotomous Nature of Silver in the 21st Century
Abstract
Theoretical background: Silver has a great importance in the real economy, i.e. in photography, medicine, electrical, electronic and chemical industry. The growing importance of renewable energy sources and the development of solar panels, accumulators and batteries means that the role of silver is significantly strengthened. At the same time, it is also used as an investment asset providing variety in portfolios, on numerous occasions being a cheaper substitute for gold. Researchers are studying connections between those two resources and providing different perspectives on their future based on real economy and the financial market.
Purpose of the article: The purpose of this article is to assess the current role of silver in the economy and answer the question of its investment prospective.
Research methods: The research methods include elements of descriptive statistics and Pearson’s linear correlation between the prices of silver, gold and copper of the EUR/USD exchange rate and the Dollar Index. The research period is from 2000 to 2023. The analyzed data are daily. A measure of the amount of money in circulation in the United States is the M2 index, which includes cash in circulation and deposits. The inflation will be shown by the Consumer Price Index. The research method is also critical analysis of the subject literature.
Main findings: We found that the change in the price of silver is strongly dependent on the USD, and specifically on its supply. A significant increase in the price of silver in the analysed period is related to the ongoing process of quantitative easing and financialization, understood as a growing volume of futures contracts. The occurrence of silver and copper in nature makes them dependent on each other, not only in determining prices, but also currently constitutes a barometer of industrial development. Thanks to the growing demand from industry, shortages of silver can result in serious consequences for production, for which reason they may decide to aggressively improve metal recycling efficiency or hoarding supply, which might push prices further up. However, investment use will not disappear due to its anti-inflation characteristics and may cause an increase in demand among investors who see gold as too expensive.
Keywords
Full Text:
PDFReferences
Adrangi, B., Chatrath, A., & Raffiee, K. (2003). Economic activity, inflation, and hedging: The case of gold and silver investments. The Journal of Wealth Management, 6(2), 60–77.https://doi.org/10.3905/jwm.2003.320482
Alavi, M., & Hamblin, M. (2023). Antibacterial silver nanoparticles: Effects on bacterial nucleic acids. Cellular, Molecular and Biomedical Reports, 3(1), 35–40. https://doi.org/10.55705/cmbr.2022.361677.1065
Apergis, I., & Apergis, N. (2019). Silver prices and solar energy production. Environmental Science and Pollution Research, 26(9), 8525–8532. https://doi.org/10.1007/s11356-019-04357-1
Arendas, P. (2016). Gold-silver ratio and its utilisation in long term silver investing. Mediterranean Journal of Social Sciences, 7(1), 285–290. https://doi.org/10.5901/mjss.2016.v7n1p285
Baur, D.G., & Tran, D.T. (2014). The long-run relationship of gold and silver and the influence of bubbles and financial crises. Empirical Economics, 47(4), 1525–1541. https://doi.org/10.1007/s00181-013-0787-1
Bürger, O. (1995). The monetary aspect of gold from prehistoric to modern times. In G. Morteani & J.P. Northover (Eds.), Prehistoric Gold in Europe (pp. 33–44). Springer. https://doi.org/10.1007/978-94-015-1292-3_5
Brooks, C. (2019). Introductory Econometrics for Finance. Cambridge University Press.
Ciner, C. (2001). On the long run relationship between gold and silver prices. A note. Global Finance Journal, 12(2), 299–303. https://doi.org/10.1016/s1044-0283(01)00034-5
Conte, A., Baron, M., Bonacchi, S., Antonello, S., & Aliprandi, A. (2023). Copper and silver nanowires for CO2 electroreduction. Nanoscale, 15(8), 3693–3703. https://doi.org/10.1039/d2nr06687d
De Souza, G.D., Rodrigues, M.A., Silva, P.P., & Guerra, W. (2013). Prata: breve histórico, propriedades e aplicações. Educación química, 24(1), 14–16. https://doi.org/10.1016/S0187-893X(13)73189-6
Dibooglu, S., Cevik, E.I., & Gillman, M. (2022). Gold, silver, and the US dollar as harbingers of financial calm and distress. The Quarterly Review of Economics and Finance, 86, 200–210. https://doi.org/10.1016/j.qref.2022.07.003
Drake, P.P. (2022). The gold-stock market relationship during COVID-19. Finance Research Letters, 44(1), 1–7. https://doi.org/10.1016/j.frl.2021.102111
Durán, N., Rolim, W.R., Durán, M., Fávaro, W.J., & Seabra, A.B. (2019). Nanotoxicologia de nanopartículas de prata: Toxicidade em animais e humanos. Química Nova, 42(1), 206–213. https://doi.org/10.21577/0100-4042.20170318
Fay, C.R. (1935). 2. Newton and The Gold Standard. Cambridge Historical Journal, 5(1), 109–117. https://doi.org/10.1017/s1474691300001256
Federal Reserve Board. (n.d.). https://www.federalreserve.gov
Flament, C., & Marchetti, P. (2004). Analysis of ancient silver coins. Nuclear Instruments and Methods in Physics Research Section B: Beam Interactions with Materials and Atoms, 226(2), 179–184. https://doi.org/10.1016/j.nimb.2004.03.078
Flynn, D.O., & Giráldez, A. (2002). Cycles of silver globalization as historical process. World Economics, 3(2), 1–16. https://doi.org/10.1525/9780520964297-057
Friedman, M. (1990). The Crime of 1873. Journal of Political Economy, 98(6), 1159–1194. https://doi.org/10.1086/261730
Grandell, L., & Thorenz, A. (2014). Silver supply risk analysis for the solar sector. Renewable Energy, 69(1), 157–165. https://doi.org/10.1016/j.renene.2014.03.032
Graedel, T.E., Allwood, J., Birat, J., Reck, B.K., Sibley, S.F., & Sonnemann, G. (2011). Recycling rates of metals – a status report. United Nations Environment Programme. https://wedocs.unep.org/handle/20.500.11822/8702
Hart, G.D. (1966). Ancient coins and medicine. Canadian Medical Association Journal, 94(2), 77.
Haynes, W.M., Lide, D.R., & Bruno, T.J. (2016). Abundance of elements in the earth’s crust and in the sea. CRC Handbook of Chemistry and Physics, 97(2402), 14–17. https://doi.org/10.1201/9781315380476
Hillier, D., Draper, P., & Faff, R. (2006). Do precious metals shine? An investment perspective. Financial Analysts Journal, 62(2), 98–106. https://doi.org/10.2469/faj.v62.n2.4085
Irwin, D.A. (2012). The Nixon shock after forty years: The import surcharge revisited. World Trade Review, 12(1), 29–56. https://doi.org/10.1017/s1474745612000444
Lee, M., Ko, Y., & Jun, Y. (2015). Efficient fiber-shaped perovskite photovoltaics using silver nanowires as top electrode. Journal of Materials Chemistry A, 3(38), 19310–19313. https://doi.org/10.1039/c5ta02779a
Lei, H., Xue, M., Liu, H., Ye, J. (2023). Precious metal as a safe haven for global ESG stocks: Portfolio implications for socially responsible investing. Resources Policy, 80(103170), https://doi.org/10.1016/j.resourpol.2022.103170
Lucey, B.M., & Tully, E. (2006). The evolving relationship between gold and silver 1978–2002: evidence from
a dynamic cointegration analysis: a note. Applied Financial Economics Letters, 2(1), 47–53. https://doi.org/10.1080/17446540500426789.
Malandrakis, A.A., Kavroulakis, N., & Chrysikopoulos, C.V. (2019). Use of copper, silver and zinc nanoparticles against foliar and soil-borne plant pathogens. Science of The Total Environment, 670(1), 292–299. https://doi.org/10.1016/j.scitotenv.2019.03.210
Mamcarz, K., (2017). Cena złota jako determinanta kursów akcji kopalni złota. Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia, 51(4), 226. https://doi.org/10.17951/h.2017.51.4.225
Mansfield, E. (2002). Podstawy makroekonomii. Zasady, przykłady, zadania. Placet.
Orishev, A.B., Mamedov, A.A., Grachev, A.B., & Pichuzhkin, N.A. (2021). Silver investment coins as a guarantee of financial security. European Proceedings of Social and Behavioural Sciences. https://doi.org/10.15405/epsbs.2021.09.02.32
Pierdzioch, C., Risse, M., & Rohloff, S. (2015). Cointegration of the prices of gold and silver: RALS-based evidence. Finance Research Letters, 15(1), 133–137. https://doi.org/10.1016/j.frl.2015.09.003
Plakandaras, V., & Ji, Q. (2022). Intrinsic decompositions in gold forecasting. Journal of Commodity Markets, 28(1), 100245. https://doi.org/10.1016/j.jcomm.2022.100245
Pulit-Prociak, J., & Banach, M. (2016). Silver nanoparticles – a material of the future…? Open Chemistry, 14(1), 76–91. https://doi.org/10.1515/chem-2016-0005
Purcell, T.W., & Peters, J.J. (1998). Sources of silver in the environment. Environmental Toxicology and Chemistry, 17(4), 539–546. https://doi.org/10.1002/etc.5620170404
Redish, A. (1990). The evolution of the gold standard in England. The Journal of Economic History, 50(4), 789–805. https://doi.org/10.1017/s0022050700037827
Refinitiv Eikon Database. (n.d.). https://eikon.refinitiv.com/
Sousa, A., Ramalho, A., Fernandes, E., & Freitas, M. (2022). Nanopartículas de prata. Revista de Ciência Elementar, 10(3), 1–3. https://doi.org/10.24927/rce2022.040
Thomsen, R. (1959). The monetary history of Rome. Scandinavian Economic History Review, 7(1), 79–94. https://doi.org/10.1080/03585522.1959.10411409
Watson, A.M. (1967). Back to gold – and silver. The Economic History Review, 20(1), 5–26. https://doi.org/10.1111/j.1468-0289.1967.tb00120.x
World Silver Survey. (2023). https://www.silverinstitute.org/wp-content/uploads/2023/04/World-Silver-Survey-2023.pdf
Złoty, M. (2022). Finansjalizacja wybranych rynków surowcowych na świecie. Wyd. UŁ.
DOI: http://dx.doi.org/10.17951/h.2024.58.2.195-210
Date of publication: 2024-07-05 15:45:04
Date of submission: 2023-09-21 09:38:11
Statistics
Indicators
Refbacks
- There are currently no refbacks.
Copyright (c) 2024 Marcin Złoty
This work is licensed under a Creative Commons Attribution 4.0 International License.