Silver in-elasticity refers to the fact that the demand for silver is relatively inelastic. This means the demand for silver, especially industrial demand, is not expected to drop as a result of a substantial increase in the silver price. This is another great benefit of silver that should not be missed by the potential silver investor.

The reason why the demand for silver is relatively inelastic is because in many instances there are no alternatives or substitutes available for silver, and when available, the alternatives or substitutes simply do not offer the same qualities as silver. Silver is for one the best conductor of electricity available on the market and it is relatively inexpensive if one considers that only tiny amounts of silver are used in most applications. E.g. in the manufacturing process of the average computer only a tiny fraction of a troy ounce of silver is used. At a silver price of $18 per fine ounce (at the time this was written) only silver worth about 60 cents is used per computer. Now for argument sake assume that the silver price shots up to $120 per fine ounce. The silver used in the manufacturing of the average computer will now cost more or less $4, which equates to a percentage increase of over 560%. This will however not discourage computer makers from using silver, especially if one considers that the cost of the silver used in the manufacturing of the average computer is only a fraction of the total manufacturing cost. In fact, at $4 the cost of the silver used to manufacture the average computer is less than 1% of the total manufacturing cost. Even if the silver price shots up to $500 per fine ounce it will be highly unlikely that computer makers will drop silver in the computer manufacturing process. At $500 per fine ounce the cost of the silver used to manufacture the average computer will be more or less $16, which will still equate to only a fraction of the total cost to manufacture a computer. 

Given the above, even the cynics among us have to admit that the demand for silver is going to remain strong despite substantial silver price increases. Now some will say that a relatively low silver price of around $18 (at the time this was written) simply doesn’t indicate a strong demand for silver. This is however misleading, especially if one considers the rampant manipulation of the silver market that has been going on for some time now. Make no mistake gentlemen, the silver market manipulators are increasingly fighting an uphill battle, sooner or later they’re going to hit the proverbial ‘brick wall.’ This is when the silver price is expected to shot up to astronomical levels which will give a true reflection of the supply and demand factors that drive the silver price (spot price of silver). At that stage one can expect that the bankers and their allies around the world will try their best to confiscate both gold and silver by any means possible, legal and otherwise. There are however ways to protect yourself against possible gold and silver confiscation. Silver Bullion is of the opinion that common sense is the greatest tool one can use to get around it.

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