You should all own some silver. Just don’t expect it to make you rich

Silver is cool, beautiful and immensely useful. But for investors it's the most frustrating of metals. Dominic Frisby explains why you should own some. And why it will never make you rich.

(Image credit: 2012 Bloomberg)

Silver is the most frustrating of metals. I’ve said it before and I’ll say it again: never was there a metal, or even an investment class with so much potential – and yet never was there one that so consistently disappoints. But one day, Rodney, it will go to its rightful place on the moon.

I think everybody knows someone like this; someone to whom life seems to have handed all the best cards. They’re tall, good looking, they never seem to have to worry about things that blight the rest of us like their weight, they’re well spoken, they are likeable, they dress well, they’re comfortable in company, they’re bright, they’re articulate, opportunities always seem to come their way.

And yet, somehow, they always make a mess of things. It’s never their fault. And their lives never work out. Yet the bad luck is as often as not the result of poor choices. You look at the person in question and all you see is masses of untapped potential. And so you want to help, and you send some kind of opportunity their way. Again. And they mess that up as well.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Silver’s like that. It’s the investment equivalent of that person. It’s beautiful. It’s cool. It’s got a certain mystique. It’s niche. It’s easy to buy and invest in. It’s easy to talk about. It’s got a great story

Silver is the metal of tomorrow – and perhaps it always will be

Think of all the reasons you buy a monetary metal. You want an asset that’s nobody’s liability. That gets you out of the financial system. That’s insurance. That hedges against the debasement of currency. Those are all valid reasons to buy silver.

It has umpteen industrial uses, too. It gets used in so many new technologies, from medical to electrical. Every smartphone has silver in it. Every computer. Every jet engine. Every solar panel.

All the best batteries contain silver. It’s used in detergent, deodorant, wart treatment, antimicrobial lab coats, 3D printing, plastics, jewellery, wood preservation, water purification. Is there anything that doesn’t contain silver, one wonders?

They say that the way to get rich in mining is not through mining, but by selling picks and shovels. If you want a picks-and-shovels play on the amazing world we are living in, the extraordinary technologies that are emerging, the expanding middle-classes of Asia, Africa, Eastern Europe and South America, then surely silver is the picks-and-shovels play. It’s a picks-and-shovels play on the 21st century.

And here we are today. Silver is $17.50 an ounce. It was $17.50 an ounce in 1979. I was ten years old in 1979. I am 50. Forty years of buy and hold – and nothing. Is that all I have to show for 40 years of prescience?

Silver famously went to $50 in 1980. After 31 years of waiting, it went to $50 again in 2011. And here we are in 2020 and silver is $17.50 – 65% off its all-time highs. Was ever there a metal so woeful?

Silver is glorious and you should own some, but don’t expect to get rich

On the other hand was ever there a metal so cheap? Most silver mining companies can’t even make money at today’s prices. They explore for the metal, they find some, everyone gets excited, they develop the property, the raise hundreds of millions, they build a mine. And then the mine doesn’t make money.

So they have to raise more money to keep the mine open until the silver price is high enough to make money. How long will they be waiting? Another 40 years?

“It’s manipulation! The futures exchanges are rigged! They’re suppressing the silver price because they know they’ll go bust if they ever have to deliver the silver they’ve sold short!”

Maybe. But you and I, we are just little guys who want to invest and grow our capital a little bit so we can look after ourselves and our families. We don’t want to go to war with big banks and futures exchanges. We don’t have the time. We don’t have the appetite. We aren’t going to win.

Silver’s in a bull market. Sort of. Not like US stocks or bitcoin or anything like that. But it’s going up. Sort of. In 2018 it was $14. It went up in 2019. Almost got to $20. Yup. $20. Just 60% off its high. Here we are in 2019. It’s $17.50. It’ll probably go to $20 again. If things really get cooking we might even hit $22.

Everyone should own some silver. There’s something about silver that’s good for the soul. All that magical lunar stuff – there’s something to it. It does kill vampires and nobody wants vampires in their life.

Wear some silver jewellery. Have your morning tea in a Georgian silver tea set. Have some silver bars and use them as door stoppers. Get burgled and have your burglar trip over them, but not steal them (believe me it’s happened). Have some silver coins. Show them to your friends. Have your kids handle the silver and explain to them that this used to be money. An ounce of this stuff – a silver dollar – was once a day’s wage for a working man.

Cowboys, knights, ancient Athenian oarsmen – they were all paid with this stuff. It’s the best way there is of measuring relative historical wages. A pound was once a pound of sterling silver, don’t you know. The words silver and money are interchangeable in something like 100 different languages. There is so much history to this metal.

But don’t expect it to make you rich. You’ll think it will, but it won’t. And then you’ll think it will again. But it won’t. As I say, it’s like that person you know. The one with all the potential. Who’s now a drunk.

Daylight Robbery – How Tax Shaped The Past And Will Change The Future is available at Amazon and all good bookstores with the audiobook, read by Dominic, on Audible and elsewhere. If you want a signed copy, you can order one here.

Dominic Frisby

Dominic Frisby (“mercurially witty” – the Spectator) is, we think, the world’s only financial writer and comedian. He is the author of the popular newsletter the Flying Frisby and is MoneyWeek’s main commentator on gold, commodities, currencies and cryptocurrencies. 

His books are Daylight Robbery - How Tax Changed our Past and Will Shape our Future; Bitcoin: the Future of Money? and Life After the State - Why We Don't Need Government. 

Dominic was educated at St Paul's School, Manchester University and the Webber-Douglas Academy Of Dramatic Art. You can follow him on X @dominicfrisby