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Silver Jewelry as a Factor in the Worldwide Silver Market

Silver has been used, as an ornament and a means of coined exchange, since ancient times. Precious metal investing for much of human history has been in the form of jewelry. This is seen in the Indian gold market, which is particularly strong during the wedding season.

This custom seen as quaint by some in the Western World could be the very thing that maintains wealth in a serious crisis. However, more likely, it will always have an intrinsic value and will occasionally be very valuable, sometimes when that comes in very handy.

While the act of keeping silver jewelry in a state of high luster does remove some of the metal content over time, such pieces are not often stamped with a weight. Often they contain stones that need to be removed when calculating the weight if one decides to sell. However, because silver fetches such a small fraction as compared to gold and other precious metals, silver jewelry is usually sold last when prices sky-rocket as they did briefly in the 1970s.

There are some who believe that silver jewelry actually represents a larger part of the world's demand than is commonly believed because of short selling on the part of silver electronically traded funds (ETFs). Were these funds actually backing their investors with physical silver, there would have to be over 100 million ounces of silver stored somewhere. For those with precious metal investments in the electronic or paper-silver market, it might be wise to consider cashing out and purchasing the physical commodity if you wish to remain with precious metal investing.

Precious metals investing still takes the form of jewelry in much of the world, and where silver is the native metal, it is the dominant form of precious metals investment. Much of central and South America is rich in precious metals; gold, silver, platinum, palladium and several other rare earth elements.

Silver jewelry is very commonly available for investment and enjoyment in those countries. In fact, a tradition of silver jewelry-making is found just about anywhere except Africa and Australia, where there is far more gold to be found. Precious metals investing in the form of mint-issued silver bullion coins is a relatively recent phenomena for the average investor. In earlier times investments had to be a bit more flexible in the absence of banks.

Undoubtedly the largest sector of the physical silver market is industrial use. Many industries have declined in their use of silver, most notably the silver nitrate used in the film production industry with the advent of digital technology. On the other hand, several fledgling industries rely upon increasingly large amounts of silver, causing an overall increase in the use of industrial silver in 2008.

There are many manufacturers of silver jewelry today that make pieces large enough and fine enough to be used for precious metal investing purposes. Many pieces are available without stones. It is always a good idea to check the silver content before buying a large piece of silver jewelry for investment purposes. Though nearly all silver jewelry is stamped as being 92.5% pure, not all of it is.

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Martha Cooke

March 26, 2009

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