In the current global financial system, the international silver price is derived from trading of vast volumes of ‘paper silver’ that dwarf both physical silver exchange inventories and new physical silver supply.
To understand what is real and tangible in the silver market, it is crucial then to grasp the difference between paper silver and physical silver, and how paper silver is traded in practically unlimited quantities, while physical silver is a scarce and valuable commodity that plays a role as both an investment precious metal and an industrial precious metal.
In short, physical silver is a real tangible asset with intrinsic value, that has no counterparty risk and is difficult and costly to mine. Paper silver is not.
Paper silver is altogether different, comprising securities and derivatives spanning unallocated, synthetic, and fractionally-backed claims that do not provide any ownership of real physical silver.
In this visually stunning new infographic from BullionStar, we show the silver market as it really is, and the huge differences between physical silver and paper silver. Topics covered include:
- • The enormity of paper silver trading compared to physical silver supply and silver inventories
- • The benefits of investing in physical silver vs the risks of investing in paper silver
- • The huge popularity and production since launch of silver coins such as the American Eagle and the Canadian Maple
- • How real physical silver is both an investment precious metal and an industrial precious metal
- • How silver is a monetary metal that has been used as real money throughout history
About the author
Ronan Manly is an investment professional and research analyst with an interest in the monetary gold market. His career has taken him from Dublin to London, New York, and Frankfurt, in roles spanning portfolio management, stockbroking, and technology, working for companies including Dimensional Fund Advisors and Morgan Stanley. In his time, Ronan has collected various economic and finance degrees, most recently a Master's in Finance from London Business School.
Although curious about the commodity and precious metals markets since the early 2000s, Ronan's interest in the monetary gold market was piqued in 2011 by a visit to the Bank of England archives to research Ireland's historic gold reserves, wherein he realised that there were scores of interesting files on gold in the archives, which prompted a number of further archive visits and a lot of subsequent reading. This led to a fascination for monetary gold and for researching, analysing and writing about the gold market.
Ronan's belief is that an understanding of the historic gold market in the twentieth century is one of the keys to understanding the current and future gold market, since, while some aspects of the market have changed, behind the scenes a lot remains the same, despite central bankers claiming otherwise. Given that the monetary gold market is opaque and shrouded in secrecy, the challenge is to conduct research and find facts in order to try to put the pieces of the puzzle together.
In this BullionStar blog, Ronan will, amongst other things, attempt to shine a light on both long forgotten and contemporary aspects of the global monetary gold market by bringing original material to the attention of readers.