The Price of Silver

As I starting writing this, today’s price of silver was at $39.33.  It’s gone up 24 cents since I started writing this post.   (I used to have an app that beeped my cell phone every time the price of silver/gold changed.  Well, I quickly got rid of that annoying little pest!)

Silver is quickly headed toward the $40.00 mark. It’s up about 3 dollars from my last silver purchase, about a month ago. Adjusting for inflation, the price has never been this high.  Back between 1973-1979, the Hunt Brothers of Dallas, Texas, (yep, Hunt’s ketchup and tomato sauce–the same Hunts), along with some wealthy Arabian friends,  tried corner the market on silver.  They amassed over 200 million ounces of silver, which was basically half the world’s supply at that time.  Silver had been at $1.95 in ’73, and by the time the Hunts got through with their little shenanigans, around 1979-80, it was peaking around $53 dollars an ounce!  Well, the Federal Reserve got involved and halted the buying.  In one day, March 27th, 1980, the price dropped from $21.62 to $10.80! Countless speculators lost millions, and the Hunt brothers were convicted of conspiring to manipulate the market. When I got into making jewelry back in the 80′s, the price had dropped even more.

We will probably never return to 1973 prices, and if we do, that means the US and global markets are in a severe crisis. The stock market and  global situations continue to control the silver, gold and other precious metals prices much more than the Hunt brothers were able to manipulate. Here in the US, there are more people buying into gold and silver as inflation protection.   This speculation has a great deal to do with pricing, but also the worlds population is growing, and with the astounding price of gold, more people are buying silver and  hoarding it. Even when we think of gold, in the US, we use and wear a lot of 14k gold.  In other parts of the world, in societies where people wear their wealth, their jewelry is 18, 22 and in some cases, even 24k gold.  They consider 14k to be “junk” gold.  So that, along with foreign governments hoarding precious metals as inflation and civil unrest grows, creates more demand and more price increases.  Also, gold and silver are used in many industrial uses, in automobiles, in medical equipment, in so many other aspects. Gold and silver are  historically linked in prices, but in the past year or so, silver prices have risen at a  higher percentage rate than gold.

All this has greatly hurt jewelers, especially the little guy who is not a major buyer of precious metals.  When we buy 2 or 3 6×6 sheets of 20 gauge, while it sets us back quite a bit, that doesn’t constitute much of a purchase in the whole scheme of things.

Several students have asked why the jewelry supply stores charge so much more than the “spot” market price of silver.  ”If I buy two ounces of wire, how come I’m charged $100.00 if the spot market is $37.00.  I should only pay $77.00″, they complain.

Well, the mill (the refiner) must buy  a set amount of raw material–say 5000 ounces of unmilled silver, or other metal.  I’m not sure of the exact amount you have to buy, but at one time it was 5000 ounces. Then that silver must be refined. Copper must be added to silver in the correct percentage, thus making sterling silver.   (925% silver and 75% copper) Then the sterling silver is melted and milled into sheet, wire, tubing or whatever that particular mill makes.  The cheapest way to buy sterling is in casting grain form, but if you want plate or a “milled product”, you are paying for that.  That is called a “mill charge” and it varies from mill to mill. Sheet is one form of a milled product, and if the mill must make wire, that’s one more process, and they charge for that. You want decorative wire, that’s another thing the mill must do to the wire, so they charge a bit more for that.  Oh!  Tubing?  They really charge for that!

Then they ship it to the jewelry supply store.  Well, you can imagine, shipping metals is heavy, and UPS doesn’t do that for free, so there’s an additional charge. Finally your supplier must make a profit, so that’s tacked on.   Jewelry stores do not buy silver and mark it up 100%, or even 50% and sell it.  They make very little profit on metals. Most stores carry metals as a convenience to their customers who come there to buy tools and supplies. (I remember in my innocence as a beginning jeweler, coming from a family who had owned retail shops and galleries, I thought that if I had a tax number, I could buy my silver and tools “wholesale”, 50% off the marked price.  I blush now, thinking about that!)

So if you think the price of silver is high, feel free to go out, find and buy your own raw silver, remove all the dirt, rocks, bugs, roots, etc.  Then melt it, add the copper, and roll it into a sheet.  And let me know how that’s workin’ for you.  You will learn that you just have to bite the bullet and pay the price.

Supply stores are now in a tenuous position.  With the uncertain pricing of metals, what they buy today may be worth more tomorrow, or it may drop and they lose money.  Some supply stores are cutting back on ordering silver from the mill, and you really can’t blame them. What would you do? We think twice now about going to buy $200.00 worth.  What if you had to order $5,000.00+ worth so your customers would have what they need?  So cut the supply houses some slack and don’t growl too much, its not their fault.

Where will this end?  I don’t know.  No one knows.  It’s all just a guess. I love making silver jewelry, so I will continue as long as I can, and I love copper, too, and am making more copper and brass (bronze?) jewelry.  But copper is going up in price, too.   I refuse to make paper jewelry.  It’s a bear to solder!

For more info and to keep tab of the daily changes on all precious metals, go to kitco.com and you can download that annoying little beep for free, or you can just check it several times a day yourself.

Frustratingly yours,

Lexi

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