Silver and platinum group metals are dirt cheap – buy now

Some of the most important precious metals in the world are also remarkably inexpensive compared with their history. That state of affairs seems unlikely to last, says David J Stevenson.

MoneyWeek cover image - precious metals mining
(Image credit: Howard McWilliam)

Almost exactly 42 years ago to the day, an attempt to corner the silver market by the three Hunt brothers – Nelson, Lamar, and William – ended in disaster. The trio, the sons of Texas oil billionaire Haroldson Lafayette Hunt Junior, began buying in 1979, with the silver price sitting at just over $6 an ounce. By 18 January 1980, the price of silver had hit a record of just under $50 per ounce, and the Hunt brothers were thought to own around a third of the entire world supply of silver not held by governments. However, the Hunts had borrowed heavily to back their purchases – so when concerned regulators introduced limits on leverage, and the Federal Reserve discouraged banks from making such loans, the silver price began to fall, and the brothers soon faced a huge margin call that they couldn’t fund. By 27 March 1980 – “Silver Thursday” – the silver price had plunged all the way back to $11 per ounce, and the Hunts lost a fortune.

After that, silver took 30 years to regain the $50 level, which it finally achieved in 2011. Another decade on, and the price is still struggling to top $25 per ounce. Indeed, in real (inflation-adjusted) terms, dollar-priced silver isn’t much higher now than it was just after World War I. Yet silver is an extremely useful element whose range of applications just keeps growing. It’s very durable and one of the world’s best conductors of electricity, which means that nearly all computers and mobile phones contain silver, as it’s perfect for coating electrical contacts on printed circuit boards. The metal is also used in making solar cells and in plasma display panels. On/off buttons for TVs, phones, microwaves, children’s toys and keyboards all use silver membrane switches, while silver ink removes the need for wires. Silver coatings are applied to medical devices, bandages and ointments to help fight infections. Silver ions are effective against antibiotic-resistant bacteria, specifically MRSA, and are also added to water-purification systems as a sanitiser. And, of course, silver is also widely used for jewellery.

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Contributor

David J. Stevenson has a long history of investment analysis, becoming a UK fund manager for Oppenheimer UK back in 1983.

Switching his focus across the English Channel in 1986, he managed European funds over many years for Hill Samuel, Cigna UK and Lloyds Bank subsidiary IAI International.

Sandwiched within those roles was a three-year spell as Head of Research at stockbroker BNP Securities.

David became Associate Editor of MoneyWeek in 2008. In 2012, he took over the reins at The Fleet Street Letter, the UK’s longest-running investment bulletin. And in 2015 he became Investment Director of the Strategic Intelligence UK newsletter.

Eschewing retirement prospects, he once again contributes regularly to MoneyWeek.

Having lived through several stock market booms and busts, David is always alert for financial markets’ capacity to spring ‘surprises’.

Investment style-wise, he prefers value stocks to growth companies and is a confirmed contrarian thinker.