Meta-Museum – HUNGER FOR SILVER CREATES GLOBAL MELTDOWN!!! CHINESE EXPORT SILVER SURVIVES THE FURNACES

 

 

 

HUNGER FOR SILVER CREATES GLOBAL MELTDOWN!!!

CHINESE EXPORT SILVER IS VIRTUALLY THE ONLY IMMUNE ANTIQUE SILVER CATEGORY

 

 

Once upon a time, the Chinese government forbade ownership of all precious metals. Now, the ban has been lifted – in fact, China recently introduced silver bullion bars for investment which is backed up by the state-run China Central Television running a campaign encouraging the population to invest in silver. These bars [left], unlike their sycee predecessors [below right], are 99.9% purity.


This is history repeating itself; China has a 1200 year love affair with silver and for many hundreds of years based its currency on silver; the only nation to be silver-centric for hundreds of years. Silver bars are also not a new phenomena in China; Sycee [or Yuan Bao] go back to the Qin dynasty [221-207 BC] and were used until the early 20th century. Silver only became a virtual non-entity when the communist government came to power.

But appealing to the Chinese to invest means there are over a billion potential new silver investors hitting the market. This is especially significant when you consider the average savings rate in China is 30 to 40% of income. However, the flood of new Chinese silver investors isn’t the only factor driving up silver prices. The increased use of silver in everything from solar cell technology to medicine is pushing up prices as well. But where is most of the technology in the world produced? China of course! Vast quantities of it – in the region of 400 million ounces annually.

Silver’s use in technology has greatly expanded its role in the global silver market in recent years. A number of factors have played a crucial factor in this growth, not the least of which is silver’s unique technical proficiency, which makes it suitable for a wide range of applications while also limiting the ability of industrial users to shift in favor less-costly alternatives. Silver is one of the best electrical and thermal conductors, which makes it ideal for a variety of electrical end uses, including switches, multi-layer ceramic capacitors, conductive adhesives, contacts and in silvered film in electrically heated automobile windshields. Silver is also used as a coating material for optical data-storage media, including DVDs. Silver is employed as a catalyst and used in brazing and soldering as well. It is also incorporated into health and medicinal applications given its natural antibacterial qualities.

You’ll find silver in many of the electronic devices we use today, including cell phones, plasma- display panel televisions, personal computers and laptops. Silver is also incorporated into button batteries, water-purification systems, automobiles, and it is a component of the growing photo-voltaic industry, to name just a few of its applications.

Another factor is that the Chinese love speculation and gambling is virtually illegal in China. Bringing in silver and advertising it on TV is very bullish because the amount of savers that can buy silver is many times larger than the Chinese savers that have and continue to buy gold. It’s also quite shrewd of the Chinese as the largest silver for industry user in the world, to get the lion’s share of world silver in its physical silver state inside it borders using the public’s money to do it.

So where’s the crisis in the wider world, you may ask?

China’s silver consumption already accounts for 70% of the global industrial usage of silver. Experts predict eye-watering values for silver by 2015 if current high-tech requirements for silver persist or grow. While China still booms despite what some experts regard as a turndown [it’s all relative!], the West is deeply into austerity and this is really having a massive knock-on effect to antique British, Continental and American antique silver. We are already at a stage where people, for some time now, have been selling antique silver to “cash converter” agencies that simply send the silver to melt as scrap in an attempt to boost strained family budgets. But worst of all, dealers are actually populating provincial and secondary auction rooms en masse everyday and buying silver, much of it destined to have the same cruel end. Incredible amounts of high quality Georgian and Victorian silver have already disappeared forever. The dealers often behave like a virtual mafia. Only the top strata of auction houses are achieving hammer prices that keep the scavenger dealers at bay and even then, sellers are not uncommonly selling in order to capitalise from assets in what are difficult times. Sellers are increasingly looking at the “real” bottom line after paying commissions and local sales tax and tragically, the scrap route often affords the seller a better option. It’s a Catch 22 situation.

Chinese Export Silver is probably the only antique silver kid on the block that’s escaping the furnaces. It’s achieving record prices – often 4-5 times the equivalent in British or American silver. I have written many times on the values Chinese Export Silver achieves at auction [Meta-Museum – Trophy Silver: Chinese Silver Wins Hands Down!!!] but never on the fact that high values for silver, as a commodity, are creating this disastrous silver drain direct to the furnace.

When we are at a time where it’s often more beneficial to a seller of Georgian and early Victorian silver to dispose of it as scrap, one could say makes Chinese Export Silver a rather unique and well-performing hedge fund.

Where’s the Chinese Export Silver going? China, of course! My estimate is there’s a huge amount of Chinese Export Silver out there in Europe and America – tens of thousands of pieces. While it’s out there, since it’s buoyant as an antique silver category, it presents a potentially amazing investment prospect for people who understand this silver and know what they’re doing. While the interest from Chinese collectors persists, we can be assured that at least one category of antique silver is not becoming an endangered species.

I guess one should say: One man’s scrap is another man’s treasure!

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