Silver is a rare, precious metal with a high intrinsic value. This fact helps explain its historical role as money and its continuing relevance as an investment asset. Since the industrial age, silver has become increasingly important as a commodity, its unique characteristics making it essential for many industrial applications, including leading clean energy uses.

Silver’s scarcity and value means there has always been a powerful incentive to safe keep and hoard the metal in its purer and weightier forms, such as coins, bars, silverware, and, to a lesser extent, jewelry. For other fabricated products, the silver content may also have some inherent value related to the precious metal content. Together, these various forms of silver constitute the above-ground stocks of precious metal.   

To examine the relationship between the level of and changes in Above-Ground stocks and the silver price, the Silver Institute commissioned a new Market Trend Report, “Price Sensitivity of Above-Ground Silver Stocks,” produced by Precious Metals Insights.

The Report contends that no correlation exists between the overall level of Above-Ground stocks and the silver price.

Some of the key conclusions from this Report are summarized below:

There is no correlation between the overall level of Above-Ground stocks and the silver price;

Annual changes in total Above-Ground stocks and the silver price are likewise uncorrelated;

In contrast, movements in bullion stocks have an impact on the silver price and vice versa. 

The vast majority of Above-Ground stocks are “immobile,” with only small net additions to or subtractions from stocks on an annual basis;

Increases in bullion stocks are often positively correlated with the price, as investment demand grows when silver prices increase, which still stimulates higher prices;

Multi-year drawdowns in bullion stocks have tended to occur in bear markets for silver and have exacerbated these. However, these drawdowns have typically set silver up for more substantial rallies as investors have rebuilt their bullion holdings; and

Above-Ground stocks of fabricated products are less price-sensitive than those of bullion. Only specific subsets of silver fabrication demand show a sensitivity to the price, such as jewelry and silverware.