A BLAST FROM THE PAST
Theodore Butler
May 1, 2009
(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)
When you follow silver and think about it as intensively as I do, it's hard not to focus on the day-to-day developments. But it's also important to step back and try to look at things years or even decades ahead. It is easy to get caught up in what's happening now, but true foresight encompasses a much longer time frame. Get the long term right and you don't have to sweat the short term.
For several months or longer, on almost a subconscious level, I have been thinking about the long term in regards to silver and electricity. I first wrote on this topic eight years ago, in just the 14th (of more than 300) article I've written for Investment Rarities www.investmentrarities.com/06-27-01.html
Silver has unique properties which makes it superior to any other substance. Importantly, it is the best conductor of electricity. This means that electricity travels faster while less of it is lost with silver as the conductor. If there is one thing that has impacted the world over the past 100 years it is the widespread use of electricity. Copper is the second best conductor of electricity and costs much less than silver. About 750 times more copper is mined than silver and much more of it is used in electrical applications. But when performance is critical, silver is the electrical king.
In my original article, I looked into future applications of silver in solar (photovoltaic), electric or hybrid vehicles and superconductors. In all three applications we have come a long way and hardly any way at all, given the journey ahead. Some recent developments suggest that the pace is about to pick up for the consumption of silver.
Since 2001, the production and proliferation of solar panels and solar-powered devices has been impressive. The future for solar power looks almost limitless. And why not? Solar power is the cleanest and cheapest form of electrical generation once installed. It's the greenest of the green. Installation costs, while still formidable, are declining yearly. Silver plays an important role in collecting and concentrating the electrical current from photovoltaic cells. Another form of solar uses silver back mirrors to concentrates the sunlight.
The production and sale of hybrid vehicles has exploded since 2001, with Toyota's Prius a common sight on the roads. These gas/electrical battery vehicles dramatically extend miles per gallon. When gasoline prices were at their peak, there were waiting lists for these autos. Honda is now introducing an even more affordable version, and many manufacturers will add hybrids or all-electrical vehicles soon. This electrical transmission requires silver to insure performance in batteries, contacts and switches.
China recently embarked on an ambitious long-term plan to become the leader in world production and sales of all-electric vehicles. China has recently emerged as the world's largest producer and consumer of gas-powered vehicles. But China knows the limitation that gasoline-powered vehicles have in its future. They have decided to leapfrog gas and hybrid production to become the leader in all-electric powered vehicles. There should be no doubt that this requires vast quantities of silver.
When I wrote about superconductivity in 2001, the main promise was for electrical transmission. Some studies have shown that as much as a third of all electricity produced is lost in its transmission over high-powered wires (mostly aluminum). No, I'm not suggesting that silver will replace aluminum in high-powered transmission wires. Due to the cost and weight that's not feasible. Besides, there's hardly enough silver available as it is.
However, an announcement just this week, from the new Administration has focused attention on the electrical grid in our country. It is operating on a system that is essentially 100 years old. It is inefficient and loses too much electricity in transmission. As the world's best conductor of electricity, silver will play an important role in the new technology and devices developed to increase the efficiencies of the grid.
Like China, we will also be producing and using all-electric cars in the near-future. As these vehicles are plugged in to be recharged, tremendous new strains will be placed the electrical grid. Where will the power come from? Only from new power generation and efficiency improvements in current transmission systems. All this requires silver in a wide variety of applications.
There will continue to be dramatic gains in solar power, electric vehicles and electrical transmission. The future will require significant quantities of silver. This will exert a powerful stimulus on silver prices. You should buy silver for its many electrical applications, not the least is the "charge" it can give to your financial well-being.
Theodore Butler
Silver Analyst, Silver Newsletter
INVESTMENT RARITIES
www.investmentrarities.com/index14.html
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