Silver is harder to think about clearly than gold. Gold is essentially pure money: it has almost no industrial use that can’t be served by something cheaper, so its price moves on sentiment, central bank policy, and the dollar. Silver is different. It has a real job. Thousands of them, actually. And those jobs — together with its long monetary history — give silver a schizophrenic price behavior that confuses even experienced investors.
This piece is the foundation. It covers what silver actually is, where it comes from, what it does, and why its dual identity as money and industrial input matters for understanding its price.
The Metal Itself
Silver’s chemical symbol is Ag, from argentum, the Latin word for silver. Its atomic number is 47. These facts matter less than the physical properties that flow from them.
Silver has the highest electrical conductivity of any element — it conducts electricity slightly better than copper and significantly better than gold or aluminum. It also has the highest thermal conductivity and the highest optical reflectivity of any metal. These properties are not incidental. They are why silver appears in circuit boards, electrical contacts, solar panels, batteries, and mirrors.
Silver is also naturally antibacterial. Silver ions interfere with bacterial cell function, which is why silver has been used in wound dressings, water purification, and medical devices. Ancient civilizations used silver vessels to store water and wine without fully understanding why — the effect is real, even if the mechanism wasn’t understood until the modern era.
In its pure form, silver is soft and white with a bright metallic luster. Most silver used in industry and jewelry is alloyed with small amounts of copper or other metals to improve hardness. Sterling silver, for example, is 92.5% silver (by mass).
A Note on Units
Before going further: silver is measured in troy ounces, not the avoirdupois ounces used for most everyday weight. These are not the same.
- 1 troy ounce = 31.1035 grams
- 1 avoirdupois ounce = 28.3495 grams
A troy ounce is about 10% heavier. When you see a silver price quoted — “$50 per ounce” — that is per troy ounce. When you buy a one-ounce silver coin, it contains one troy ounce of silver. This distinction matters when you’re computing the metal value of anything, so commit it to memory.
Silver as Money: 4,000 Years in Brief
Silver’s monetary history is longer than that of any current fiat currency — longer, in fact, than virtually any institution that exists today.
The earliest evidence of silver being used as a medium of exchange dates to ancient Mesopotamia, around 2500–3000 BCE, where silver rings and ingots were weighed out in transactions. By around 600 BCE, the kingdom of Lydia (in modern-day Turkey) was minting some of the first standardized metal coins — the famous electrum coins, which contained both gold and silver. Athens followed with its owl tetradrachm, a large silver coin that became the international reserve currency of the ancient Mediterranean world.
For most of human history, silver was the everyday money. Gold was the money of large transactions — trade, warfare, tribute. Silver filled the middle tier. Copper and bronze covered small change. This three-tier monetary stack was nearly universal across ancient and medieval civilizations, from China to Rome to the Islamic Caliphates.
In the Americas, the Spanish discovery of enormous silver deposits at Potosí (in modern Bolivia) in 1545 and later in Mexico created a flood of silver that rewired global trade. The Spanish peso de ocho — the “piece of eight” — became the first global reserve currency, used from Manila to Boston. The U.S. dollar was originally defined in terms of silver: the Coinage Act of 1792 set the dollar at 371.25 grains of fine silver (approximately 0.77 troy ounces).
De-Monetization: How Silver Lost Its Monetary Role
Silver’s fall from monetary grace happened in two stages over about a century.
The first was the Crime of 1873 — a nickname given by silver advocates to the Coinage Act of 1873, which ended the U.S. practice of free silver coinage (a process by which anyone could bring raw silver to the Mint and have it coined). The act effectively placed the U.S. on a de facto gold standard, and silver’s monetary role shrank dramatically. The political fight over silver money dominated U.S. politics for the next two decades — the “silver question” was one of the defining issues of the Gilded Age, culminating in William Jennings Bryan’s famous “Cross of Gold” speech at the 1896 Democratic Convention.
Silver limped on in various partial monetary roles through the early 20th century. U.S. silver coins continued circulating until 1964, when the rising price of silver made the metal content of dimes, quarters, and half-dollars worth more than face value. The government quietly shifted to copper-nickel clad coins. Silver left U.S. pockets for good.
The second stage was the 1971 Nixon Shock: the end of the Bretton Woods system, which had tied the dollar to gold (and, through the dollar, to silver in residual ways). After 1971, no major currency remained convertible to precious metals. The entire international monetary system became fiat — money backed by government authority and central bank management rather than by metal.
This is the context in which modern silver advocacy operates. The “silver is real money” argument is a historical claim, not a fantasy — silver was real money for most of recorded history. Whether it should be again, or whether it will be forced back into that role by some future monetary disruption, is a separate question that this site won’t pretend to answer.
Silver as an Industrial Metal
Here is where silver diverges sharply from gold.
Gold’s industrial demand is minimal — less than 10% of annual consumption is industrial, and most of that is jewelry. Silver is the opposite. According to the Silver Institute’s World Silver Survey, industrial applications typically consume roughly 50% of annual silver demand, with the share trending upward as solar power expands.
The breakdown, approximate and subject to annual variation:
- Electrical and electronics (~25% of total demand): Contacts, conductors, printed circuit boards. Silver paste is applied to solar cells to collect electrical current.
- Photovoltaics/Solar (~15%+, growing): Silver is essential to modern solar panel manufacturing. Each panel uses a small but meaningful amount of silver paste. As the world installs more solar capacity, silver demand from this sector rises.
- Brazing alloys and solders (~5%): High-temperature joining of metal components.
- Photography (<5%, declining): Silver halide film is nearly obsolete but still used in some medical imaging and specialty applications.
- Medical (~3%): Wound dressings, coatings on medical devices, water purification.
- Other industrial: Mirrors, catalysts, batteries.
On the non-industrial side:
- Jewelry and silverware (~25%): A large and relatively stable demand source.
- Investment demand (~15–20%): Coins, bars, and ETF purchases.
- Central bank and sovereign holdings: Silver reserves are much smaller than gold reserves for most central banks, though some countries — historically — held significant silver.
Global silver production is approximately 25,000–27,000 metric tons per year, based on USGS estimates. The leading producing nations include Mexico, China, Peru, Russia, and Australia, in rough order by recent output. Much of the world’s silver is produced not from dedicated silver mines, but as a by-product of lead, zinc, copper, and gold mining — a structural feature with important implications for supply flexibility (we’ll cover this in the markets piece).
The Dual Nature Problem
This is the crux of why silver is analytically difficult.
When the economy is strong and industrial demand is robust, silver benefits from rising consumption. But when the economy weakens, industrial demand falls, and silver should fall with it — except that in periods of economic stress, investment demand for silver (as a monetary metal, a store of value, a hedge) often rises. The two forces pull in opposite directions during precisely the moments when the tension is most interesting.
Gold avoids this problem by being almost purely monetary. Silver cannot.
The result is that silver tends to be more volatile than gold. It amplifies moves in both directions. When gold rallies in a risk-off environment, silver often rallies harder. When commodities sell off, silver can fall further than gold. The gold/silver ratio — the number of ounces of silver it takes to buy one ounce of gold — swings dramatically over time as a result. (See the separate piece on the gold/silver ratio for more on this.)
Whether this volatility is a feature or a bug depends on what you’re trying to accomplish. For a speculative trade, silver’s volatility offers more leverage. For a wealth preservation position, it introduces more short-term risk.
The Bottom Line
Silver is not simply “poor man’s gold.” It’s a different animal: a metal with genuine industrial indispensability, a 4,000-year monetary history, and a price behavior that reflects both. The investors who understand it best tend to hold both aspects in mind simultaneously — never forgetting that it used to be money, but also never forgetting that it is currently a commodity.
Everything that follows on this site — market mechanics, historical analysis, practical stacking advice — builds on this foundation. If you’ve read this far, you’re ready to go deeper.
Sources
[1] The Silver Institute / Metals Focus, World Silver Survey (annual). silverinstitute.org
[2] U.S. Geological Survey, “Mineral Commodity Summaries: Silver,” various years. usgs.gov
[3] Roy W. Jastram, Silver: The Restless Metal (John Wiley & Sons, 1981). The foundational academic work on long-run silver price history and monetary role.
[4] Milton Friedman and Anna J. Schwartz, A Monetary History of the United States, 1867–1960 (Princeton University Press, 1963). Essential context for the Crime of 1873 and the silver/gold debates.
[5] U.S. Coinage Act of 1792, establishing the dollar’s silver content definition. (Primary historical source — widely reproduced in monetary history literature.)
[6] U.S. Coinage Act of 1873. (Primary historical source.)