Jessica Cross: Silver Coming Into Its Own

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April 30, 2010
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The CEO of precious metals and commodities research firm VM Group explains why silver's new medical applications could brighten the metal's outlook in the coming months.
  • How silver has been ‘typecast’
  • Is faith in the gold/silver ratio well-placed?
  • Using silver to purify water, make clothes less stinky

 

When it comes to precious metals, silver frequently gets short shrift. The metal is often seen as the "poor man's gold"a cheap entry point into precious metals investing for those who can't afford to buy its posher yellow cousin.

But silver's hybrid personalityhalf precious metal, half industrial workhorsemeans it can be used in a much wider array of applications. And it's silver's increasing use as a biocide and antimicrobial agent that may be the most promising demand sector of all, says Jessica Cross, CEO of VM Group. Working in conjunction with Fortis Bank Nederland, VM Group provides research and analysis of the metals and broader commodities markets, including precious and base metals, energy, agribusiness and renewables.

In this second of two interviews, HAI Associate Editor Lara Crigger sat down with Cross to discuss the outlook for silver, including whether faith in the gold/silver ratio is well-founded, why silver recycling is set to decline and how silver's being used to purify water and gym clothes alike.

 

Crigger: In a recent speech to the London Bullion Market Association, you said silver had been "typecast" by investors. What did you mean by that?

Cross: I think it's been typecast by two completely separate markets. In India, you have a large population of rural-based people, who aren't very high on the income ladder. They'll tend to invest in silver, as far as they can invest in anything, and when they get more wealthy and affluent, they then tend to "trade up" into gold. So silver is the first point of entry, but gold is what they really aspire to, when their income allows them. But you see this in the U.S. as well. There, I think you have a sector of investors who say, "Well, we can't really afford gold, but we will take silver." So silver is seen as the poor man's gold—which I think is completely wrong, as silver has a huge role to play as part of an investment portfolio.

But apart from that, people also watch the gold/silver ratio. And when the ratio deteriorates out of silver's favor, it's used as sort of a secondary investment opportunity. A lot of people put a lot of faith in the gold/silver ratio.

Crigger: Is that faith well-placed?

Cross: Over time, I think there's certainly been a place for that perception. I much prefer to look at them as completely different, even though they're both precious metals. Gold has very limited industrial end use, while silver offers an array of end uses, which are becoming increasingly more interesting. At the end of the day, that silver supply/demand balance is going to get increasingly healthier. So although the prices will sometimes move in tandem, they're really very different.

Crigger: What are some of the more interesting new end uses for silver, now that silver-based photography is on its way out?

Cross: There are a number of them, but I think the one that's most going to benefit is using silver as a biocide. So then you're looking at a lot of medical issues, water purification; using silver in food containers to keep things hygienic, and in fabrics, not just for the sporting field but also the leisurewear field. Silver could be used in bandages for hospitals. So there's a huge range of diverse applications for use, just on the biocidal side. I think these are going to be coming into their own soon.

The beauty is, of course, that you eventually throw these items away. And even though the silver in that product that's going into the dustbin is only there in minute quantities, you're still not recycling it.

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