If you are new to concept of investing in silver bullion, you may be thinking that silver is just a shiny metal that is used in industry. Iphones, computers, jewellery, electric cars and silver tableware amongst others.

Perhaps your mother or grandmother owned some silver jewellery and that is the image that comes to mind when you think of it.

Silver is used in these industries and is very important to them, but silver is also used as money.

Like gold, silver has been used as money for around 6000 years, it has a dual function in society as a monetary metal and an industrial metal.

If you are born after 1970 chances are you won't have experienced silver coins being used in everyday transactions as a monetary metal. This contributes to the lack of awareness of silvers utility as a form of money in the current era.

I am currently 40 years old. The last silver coin in circulation in my home country was phased out 15 years before I was born in 1969.

It was a 50 cent piece and it contained 80% silver and 20% copper. It contained 0.342 troy ounces of silver which would be worth $19.83 AUD today. That is 39 times its face value.

This increase in value can also be used as a relative measure of fiat currency debasement. The silver content remains the same, it just takes more fiat currency to buy it.

Australian 1966 50 cent piece

It was introduced in 1966 and production was stopped in 1969 after its intrinsic value in Australian dollars exceeded its face value in just three short years.

In the U.S.A silver coins were phased out and no longer in circulation by 1971 and globally silver coins were no longer in circulation by 1980.

Gold is primarily a monetary metal because it is very expensive to use in industry. Gold is used in many industries, but for industries that require a metal for its electrical conductivity and durability, silver is the preferred choice.

Silver is the most conductive of all metals and is highly malleable and ductile, which makes it great for small electronics applications that need a strong durable metal to conduct electricity.

Below is a list of industries that utilise silver and what percentage is used in that industry:

• Industrial Applications - 50-55% - Electronics, Solar Energy, Automotive, Brazing and Soldering.

• Jewellery - 20-25%

• Silverware and Decorative Items - 5-10%

• Coins and Bullion (Investment) - 10-15%

• Photography - 2-5%

• Medical Applications - 1-3%

• Other (Miscellaneous) - 2-5% - Includes uses in mirrors (due to silver’s reflectivity), batteries and catalysts in chemical production.

For silver to be used as money it would require it to have intrinsic value to create stability.

The industries above need silver for its intrinsic physical and chemical properties, this creates demand and therefore gives silver its intrinsic value.

Silver also satisfies the properties that are required for use as money; which are divisibility, portability, durability, fungibility, scarcity, acceptability and stability.

In my opinion, recent technological creations such as Bitcoin and other cryptocurrencies have extrinsic value because of their transfer mechanism and blockchain network, but the tokens themselves do not have any intrinsic value. Which makes them not ideal to use as money.

Great technology and code, but the coins themselves have no intrinsic value.

Gold and silver have stood the test of time for use as money.

As naturally occurring elements they cannot be replicated or created out of thin air.

Which is why they have been used as money for thousands of years.

Check out these very cool Aeginetan sea turtle silver coins that were produced in 550 BCE in the Island of Aegina, Greece. These coins were close to 95-98% pure silver.

Aegina was a major maritime power and these coins were used heavily in the mediterranean.

The Aeginetan sea turtle silver coin - Aegina, Greece 550BC

In comparison to gold, silver is more abundant in the earths crust and it can tarnish when exposed to sulfur compounds. Which when exposed, can form a black silver sulfide layer on the metal.

Gold is denser, does not tarnish or corrode and is slightly more malleable and ductile.

These slight differences make gold the king of monetary metals due to its indestructible nature and increased scarcity. Silver comes in second place.

If you were to pay for goods or services in gold or silver, silver would be more suited to everyday transactions and barter, while gold would be better suited for wealth preservation and larger purchases.

While not many people transact directly in gold and silver anymore, I believe more people will over the next 20 years. Either directly through coins and bars or indirectly through a convertible note or token.

These notes or tokens could be a gold or silver-backed government issued paper or digital currency, cryptocurrencies that are redeemable in physical metal, or gold and silver redeemable certificates that are issued via private gold vaults and exchanges.

If a country stores gold or silver within another country in the form of a repository, they can exchange the metals for goods and services without having to move it.

They can simply re-allocate it to the new owner and change ownership.

This is ideal if a country wishes to avoid accepting an unwanted currency and trade directly in gold or silver.

China has taken steps to do this in 2025 as the Shanghai Gold Exchange announced that it will be establishing a warehouse inside Hong Kong.

It may not be as beautiful or sexy as gold depending on your aesthetic preferences, but silvers utility in industry and as money can not be denied.

Macro, Inflation and Industrial Demand

Currently global debt is 315 trillion USD, with a debt to GDP ratio of 333%.

This is completely wild.

Indebted governments do not intend to let their existing bonds mature and 'pay off' the debt. They rely on 'rolling over' the debt by issuing new bonds to pay off the holders of the old bonds.

To use an analogy, If you maxed out your credit card and then applied for a new credit card to pay off the old credit card, then repeat the process, this is essentially the same thing as how governments operate.

Assuming you can always get a new credit card.

The difference is that governments have the keys to the money printer and can create currency to pay its debts and stimulate the bond market, while the individual will encounter violent force and jail time if they did exactly the same thing.

One rule for thee, one rule for me.

To reduce their overall debt burden, governments can try to grow their economies to increase GDP and therefore reduce the debt to GDP ratio.

This is the most travelled path which avoids politically unpalatable austerity measures that they think will lose them votes.

One method they use to achieve this is by setting very low interest rates to stimulate borrowing and capital investment.

This effectively reduces interest payments on newly rolled over treasury bonds and the government is happy because they now don't have to pay as much interest.

The central banks can print more currency and buy bonds to keep bonds yields low. This also helps to keep the treasury funded.

This process (quantitative easing or QE) will cause currency supply inflation and inevitably rising prices, which can reduce the debt burden on governments in the short-term by collecting more in taxes nominally.

If bond yields and consumer prices do not rise significantly they can keep this game going for a long time.

But…

It can get to a point where prices are rising so fast that citizens can lose faith in their currencies and their government.

Treasury bonds are denominated in the currencies that are rapidly losing value and nobody will want to buy these depreciating asset instruments from governments.

Think of the German hyperinflation between 1921-1923 among many other historical hyperinflations. Germany was the worlds third largest economy in 1913 and was considered highly advanced at the time.

Post-war debt was a large contributing factor to the hyperinflation.

By 1923 their Papiermark currency was worthless. The Reichsmark was later introduced with a gold backing to bring trust to the currency.

Debt based collapse.

As history suggests, in this situation people seek safety as increased capital flows into gold, silver and hard assets to protect from a depreciating currency.

I would argue we are in the process of a similar collapse already as we have witnessed the gold price rise 42.18% over the last year.

Silver has risen 43.47% in the last year with a big jump recently.

The numbers can not be ignored, although the mainstream media will do their best to ignore it as the price action signals fiat currency devaluation.

Currently the silver bullion market is in a prolonged deficit, with industrial and investment demand outstripping a constrained and inelastic supply.

Silver is a relatively small market when compared to other metals such as gold, copper, iron and aluminium. This means that an increase in demand will create larger price moves compared to an equivalent increase in demand in the gold market which is around 8 times larger.

How To Buy Silver

I personally like 1 troy ounce pure silver coins from reputable mints around the world. They are recognisable, very high quality and beautiful.

The five most popular silver 1oz coins globally are the American Silver Eagle, the Canadian Silver Maple Leaf, the British Silver Britannia, the Austrian Silver Philharmonic and the South African Silver Krugerrand. They are highly liquid and recognised.

An honourable mention would be the Australian 1oz Silver Kangaroo coin from the Perth Mint. I have the 2020 version of this coin and they are very impressive and beautiful. This coin also contains a microscropic engraved letter as a security feature to help detect against counterfeits.

Silver bars are available for usually a slightly lower premium, but they are not as beautiful as silver coins in my opinion and have less collector value.

SIlver coins can have a legal tender face value if issued from a government mint and are usually available with a maximum silver content of 1 ounce.

It is up to personal preference which you choose.

It is always better to hold physical silver as there is no counter-party risk involved if you choose to store it yourself.

You must also be aware that it is very heavy in large amounts. A 250oz monster box may challenge some people to lift.

If you are interested in buying gold and silver and storing it via secure vaults, I can recommend the services of Bullionstar in Singapore and Strategic Wealth Preservation in the Cayman Islands. I use these services and have had a great experience working with them.

Vaulting your metal adds a layer of counter-party risk, but I would argue that the risk is very low in the best companies and it is a very convenient solution especially if you travel.

Consider the reputation of these services and consider the location. It would be beneficial to choose a location where the risk of a government stealing your metal is minimal.

These companies allow for you to withdraw your allocated gold in-person or via shipment at any time along with providing many other services.

Opportunity

We are currently in a period where ownership of silver bullion could present a fantastic opportunity to preserve your purchasing power, acquire a useful commodity and acquire real money in a world of failing fiat currencies.

It has stood the test of time for 6000 years and will continue to do so.

The silver futures market where the spot price is largely derived from, routinely experiences large, sudden and aggressive sell-offs by the big players that drives the price down.

This could be for various reasons and it has been highly effective at keeping the price at resistance levels.

The phenomenon has been given a moniker, 'Mister Slammy'.

If this breaks and Mister Slammy fails to keep the price down, the silver price could be unleashed.

Happy investing.

Thankyou for reading.

-Shernon

P.S

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*Not to be construed as financial advice. This newsletter is for informational and entertainment purposes only. Please perform your own research when making financial decisions.

Cover photograph by Shernon Hague | Naoshima Island, Japan 2016 | 35mm film