May/June 1996
JUST THE FACTS: group I of the periodic table, heavy but soft, ductile, and malleable precious metals.
Key demand for gold lies in electrical and other specialized industrial applications, dental uses, investment applications, and—most of all—jewelry and decorative arts. In fact, gold is the most popular of the jewelry metals and has been for thousands of years. But perhaps even more significant than gold’s actual consumption is its importance as a financial instrument.
Silver, on the other hand, has greater importance as an industrial metal. It is principally used in photographic emulsions, but also is widely used in electrical contacts, bearings, jewelry, tableware, batteries, mirror backings, dental alloys, and coinage.
Supply Notes. In recent years, approximately 20 percent of the world’s supply of gold has come from the recovery of old scrap, such as coins, dental materials, and electronics. The balance is made up by new mine production, with South Africa, the United States, Australia, the Commonwealth of Independent States, Canada, and China laying claim as the world’s top gold-producing areas.
As for silver, what’s referred to as “secondary supplies” consist not only of recovered metal from photographic scrap, old coins, and other scrap, but also of silver exported from Eastern Europe and Asia, as well as government inventory disposals. Nevertheless, old scrap recovery represents approximately 94 percent of the total secondary supplies. New supplies come primarily from mining activities in Mexico, the United States, Peru, Canada, the Commonwealth of Independent States, and Australia.
Pricing Info. Both silver and gold may be traded on a 24-hour basis on commodity market exchanges, including the New York Mercantile Exchange’s Comex Division, the Chicago Board of Trade, the London Silver Market, and the London Gold Market. In addition, prices for these precious metals are determined by several other spot, forward, and futures markets located around the globe.
The three primary price references for silver are the London spot price, which is based upon the daily silver “fix” at 12:15 p.m.; the Comex settlement price for the nearest due month; and the Handy & Harman daily cash price. For gold, principal price references include Comex, the London Gold Market, the Handy & Harman cash price, and the Engelhard fabricated gold price.
In 1995, Comex silver traded between a high of $6.10 per troy ounce and a low of $4.38, with an average of $5.19. Comex gold, meanwhile, averaged $384.04 per troy ounce, trading within a range of $371.20 and $395.40.
—Robert J. Garino, ReMA director of commodities •
JUST THE FACTS: group I of the periodic table, heavy but soft, ductile, and malleable precious metals.