Commodity brokers and traders must have strong stomachs. The silver market’s wild ride over the last 18 or so months has been a test of nerves. Vintage silver* prices have also been dramatically affected.
From 1984-2005 silver bounced around between $3 to $10 an ounce, then 2006-2010 at roughly $10-$20. Earlier this year the market peaked at about $50 an ounce and collapsed overnight.
Rumors were rife as to the reasons why.
Including, but not limited to:
- Small investors lost their nerve
- Institutional investors were to blame
- It was another Hunt Brothers type conspiracy
- The fundamental unsoundness of the US dollar (lol)
- World silver reserves are coming to an end
Many were quick to predict that the market would fall as swiftly as it rose, but that hasn’t happened. Prices have crept back to close to the $40 mark.
Regarding commodity pricing, I have no idea, but for antique and vintage silver prices the consequences are clear.
Why vintage silver prices will not fall anytime soon
1. Long ago at University I learned about the Keynesian theory of “stickiness“. This is going to happen in the silver markets.
As the commodity price of silver rose, so did the vintage silver prices. Why? Well, the amount of silver in a piece is just one factor in pricing. Also add in:
- Artistic/aesthetic elements
So when the easily obtainable market price of the metal quintuples (and remember silver is easily convertible from finished to commodity state, I’ll return to this notion in a moment) it is a given that prices of all items containing silver will rise.
But don’t expect it to follow the downturns in the commodity price with the same swiftness and precision that it does when the market is rising. Economist have various models and theories as to why this happens, I’m not going to get into, because as I’m growing fond of saying, with apologies to my University professors this is a blog not a Ph.D.
2. Supply has been noticeably reduced. I haven’t seen any numbers about how much silver poured out of attics and basements into the scrap pile…but anecdotal evidence suggests it was an astounding amount.
To return to the point above about silver’s convertibility, can you think of another item traded on the commodities market that is as flexible as silver? To return a fork to bullion is easy, metals are the only commodity I can think of that are as flexible in this way. But unlike the other precious metals (gold, platinum, palladium) ordinary people often have lots of it around and easily accessible. That flatware set of Grandma Helen’s can easily weigh a good 8-10 pounds! Very few people have that amount of gold or platinum in the attic.
So as commodity prices rose, the silver began to appear from basements, attics, and storage units. At first it was a trickle, but once the “we buy silver” ads appeared on TV the torrent was on.
Not only has this affected the sheer quantity of silver available for the vintage silver market, but also the quality. Again, no quantifiable evidence is floating around, but anecdotal evidence suggests treasures were lost to the scrap heap. Many were lost due to sheer ignorance – silver marks are often obscure – particularly on rare and unusual pieces. Others were lost to desire to liquidate quickly – why wait for the right vintage silver buyer when you can get so much for it as scrap?
Are the attics empty?
If they aren’t, any silver in storage that would have come onto the vintage silver market will detour directly to scrap while prices are high.
What if no one is buying vintage silver?
This is a good question and the answer is unpleasant. Undoubtedly there are dealers between a rock and a hard place.
high prices + a recession = fewer customers.
Again, it’s only anecdotal but one hears about dealers scrapping stock to stay afloat. When it comes down to it, no one is going to sell their stock at below scrap value.
Are you thoroughly depressed? Don’t be. People like you who cherish and value silver for more than it’s bottom line will keep the vintage silver alive and well.
*As a point of clarification I am not speaking of pieces sold for “scrap”. When I refer to antique or vintage silver, it means pieces sold for their value as items in their current – finished – form.