November 16, 2008

Historical price of silver

Previously I discussed the historical price of gold. Generally people think of gold as an investment more than silver. But silver is a precious metal and can be bought as an investment just the same as gold. A relative of mine bought some silver as an investment during the boom in the 1970's and it took decades for the price to return to the level that he paid. Today I'll look at how the price of silver has varied over the years.



The Silver Institute has a history of the price of silver. They discuss why silver went up and down over the years and go into detail about a large boom and bust in silver prices around the 1970's and 1980's. The history they give is an interesting read and I'd recommend checking it out if you're interested.

As I write this in November 2008, spot silver is trading for about $10 an ounce. Earlier this year silver peaked over $20. The Kitco website has historical data on silver prices.

Here is a chart of silver prices for the past 100 years:

The following chart shows the price of silver from 1965 to 2008:
[edit additional] Note:  The numbers shown in the graphs above are the annual average prices.   This graph is meant to show long term trends in silver prices and not short term fluctuation.  The annual high and low prices are not shown.

From 1908 to 1965 silver didn't go up too much. Silver was commonly used to make coins. In the USA our nickels, dimes and quarters were made of silver up until 1964. This kept the price of silver fairly steady since it was tied directly to the value of currency.

After 1965 silver started to go up in value. From 1965 to 1979 silver rose from $1.29 an ounce to over $21 an ounce. For that 14 year period it had an annual average growth rate of 22%. Then the boom busted and by 1985 silver was down to under $6 an ounce. From 1979 to 1985 silver dropped at an average annual rate of -20%. Silver started another boom around 2004. From 2003 to 2008 silver climbed from less than $5 to over $20 at its peak. From 1965 when silver was $1.29 to its current price of about $10 silver has had an annual average increase of about 5%.

Silver has had a couple large booms and busts. The price has been very volatile. Overall as an investment silver has not performed very well. Given the high risk due to volatility you would be much better off investing in stocks or real estate.

19 comments:

  1. Good info, however I think I will still hold on to any silver coins I find at face value. An easy way to save money.

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  2. Dawn, keep your silver. In fact, I'd buy more. The author forgot to mention why silver prices were so volatile. Once you figure out why silver has been artificially depressed all these years, you'll know exactly where its headed in the future.

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  3. To last poster: OK so why were silver prices so volatile exactly? Why specifically should people buy more of it?? It helps nobody to make cryptic comments alluding to some sort of inside information but give no specifics at all. If you've got a legitimate reason to support the opinion that silver will be a safe investment with high return in the future then I'm sure we'd all like to know.

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  4. Silver and gold do not go up in value so much as your dollars are losing their value relative to silver/gold.
    As silver has been historically valued at roughly a 16 to 1 ratio with gold and it now sits at a 60 to 1 ratio (2009), it should gain exponentially as the precious metals reset to their true value compared to the US dollar.

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  5. This article is skewed with misinformation and straight out bullshit. Quite blatently the author either lies or has not a clue about the all time prices of silver, let alone his technical "information". Anyone can google, "what is the alltime high of silver price?", this happened in '79, went to $50.00 not adjusted for inflation!

    What this person did was make his own little excel spread sheet and post the yearly AVERAGES of silver on his little chart. Volitility & volume are what makes money genius. How can real money be risky to have if you buy low?

    At any rate, people who buy silver should thank this misinformed wanabe techincal expert...you keep selling, I'll keep buying, good luck with your fiat and 'securities'.

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  6. The numbers here are the annual averages. In 1980 the price of silver did hit over $49 an ounce. The fact that I used annual averages from the Kitco site does not reflect the all time high.

    The point of this post is to represent the long term trend of silver prices. 29 years ago silver was at $49 an ounce and today its about $16 an ounce.

    YOu could make money trading on silver as a speculative play just like you can make money day trading stocks as they bounce up and down. But silver hasn't performed well as a long term investment over the years.

    Jim

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  7. The all-time high price of silver was due to the Hunt Brothers' attempt to corner the market. It went from $6 to almost $50 due to this manipulation.

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  8. Yes, and "Silver Thursday" nearly destroyed the Hunt Brothers and several banks. They ended up filing bankruptcy after previously having a personal fortune of over 5 billion dollars.
    Camp

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  9. Well, it has been well over two years since this article was written. I am happy to announce that I saw a silver lining beneath the dark cloud painted by the author, and went the opposite direction. For the long haul.

    It is true that silver is way too volatile... for a ham-handed yuppy wannabe slickster who is ever on the lookout for a short term "investment" for their "Invethtmenth Porthfolio".

    There are many reasons why silver only recently performed so incredibly well (read=remained perfectly steady) against the [increasingly volatile] dollar. The biggest drivers of this recent disparity are Bush, who primed the inflation pump with a spend-thrifty drunken sailor GOP congress, and now Obama who, not to be outdone, opened up the trillions dollar fake money legalized Ponzi scheme throttle and took the entire nation, and global economy, for a long term Mr. Toad's wild ride.

    The global market will naturally adjust, as it always does, no differently than it did when Germany tried its pre-WWII Deutschmark printing press experiment to pay off its debts with "legally" counterfeited money. The fact that all dollars in existence were recently watered down to fractions of their former floating "value" (by Bush to some degree, and Obama on crack) is driving the dollar steadily down, and silver steadily up through a new relative roof. The very moment the U.S. Congress went from certifiably insane to absolutely bat-poop lunatick with its trillions dollar global debt float pretend money scheme - a new reality ceiling was created for silver, one that it has yet to reach, due to all the pressures applied by governments everywhere (China especially), which they MUST apply, short term, but only to delay the inevitable.

    The first two spikes in silver were but the first two waves of a global tsunami. World governments are unable to stem the flow of vomit indefinitely, and silver came out in two waves as a result. There will be ebbs and flows, but ultimately all currencies will shift and adjust to the reality, which will be reflected in the price of two loaves of bread and a 1945 Mercury dime's worth of silver. Equilibrium is inevitable for all "volatile" commodities, and silver is FAR from being in equilibrium.

    Silver is one of the most incredible safe havens in existence now, and the high it reached recently is nothing compared to what will eventually happen. Buy it, hang onto it long term as if it was land, and ride the big, big global wave.

    Oh, and those looking for a quick profit-taking buck from silver, I would say good luck, but in truth I chuckle at the idea that your timing might just be as deplorable as your wisdom, and the thought of you taking a short term bath, and washing your hands of silver afterward... it is priceless to me, and tickles me pink!

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  10. I am a student who has put every dime of savings into silver hopefully it will be a down payment on my first home shooting for it to go to over $100 by next Christmas

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  11. There will be a global economic reset at some point in the not too distant future(barring total chaos). I really think the new currency will be backed by gold and so mathematically gold and silver should at least go tenfold in price.

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  12. In a world that is slowly evolving to a cash less society were chips and computers will become the money supply, where do people get the idea that Gold and or Silver is going to be the money supply for over 7 billion people?

    Gold, Silver and Diamonds are a Ponzi scam at any price, (0.01 to 1 000 000 000 000) for the holder to make a profit they need more buyers willing to pay more money, who need more buyers willing to pay more money, who need more buyers willing to pay more money, who need more buyers willing to pay more money, who need more buyers willing to pay more money…. ETC ETC ETC

    Also of note: People keep talking about the 16:1 ration and silver; what if silver is priced correctly and it is Gold that needs to come down in price and not silver to go up.

    And: Just because people of the old past who had short life spans, little education and no human rights who routinely burned people thought to be witches horded Gold because it shines nicely does not make it the best thing in the world to buy.

    Finally: While you keep paying rent/insurance to keep your horde of shiny things, I will keep expanding my business and assets that make me a steady stream of income and gives me a hedge against inflation and insurance me against a worthless dollar all at the same time.

    Good Night.

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    Replies
    1. And when you are finally retired, in failing health and sitting back gloating about how much fake digital currency you've accumulated for all your years of hard work and it all suddenly goes Poof for any countless number of reasons leaving you completely destitute, you can really have the last laugh at the person who was dumb enough to transfer that currency into tangible assets that the rest of the world calls Money.

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  13. Silver is used in almost every electronic device, is used in the medical field, and will be extinct by 2020 if it is not recyled. The price has to go up to make it worth recycling. Silver will hit 200 dollars at least in a year or two.

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  14. 90 percent of all the silver mined has been consumed. The price of silver is so low that it is more economical for companies to buy new silver than to recycle it. Silver is used in many industries. It is not easily replacable. Gold has no industrial applications and is recycled. Silver will be rarer than gold soon. Silver could be the most expensive element/metal in 5 years or so. Buy physical Silver!!!

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  15. "shooting for it to go to over $100 by next Christmas"


    "Silver will hit 200 dollars at least in a year or two."

    So there are two Anonymous commenters who expect silver to go up +200% to +500% within short term.

    You may as well go put your money in lottery scratch tickets. You have better odds of winning a lottery jackpot then seeing silver prices skyrocket like that.

    Jim

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  16. Historically, the gold to silver ratio has been 16 to 1. Today it is approximately 50 to 1. There is no question, the markets are being manipulated. Compound that with global silver inventory is VERY low, along with the fact silver is used in many industries. No question silver is being used up. Compared with,all the gold that has ever been mined is still here. When market forces overwhelm those vermin manipulating the gold and silver prices. At that point, if gold actually achieves $10,000 per ounce, and silver returns to it's ratio norm of 16 to 1, we will have a silver price of $625. per ounce. I am not saying these prices will be achieved, but I do believe the upside potential in silver prices increasing dramatically is as certain as taxes going up.

    It is interesting that Eric Sprott who has the reputation of consistently being invested in commodities that take a dramatic upturn. Mr Sprott's company is betting heavily on silver.

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