In Ted Butler's Archive

Electricity and Silver

By Theodore Butler

It’s hard to believe, but electricity, as an everyday event, is relatively recent. Go back just one hundred years and you see what I mean. Your great-grandfather’s father didn’t get to live with the benefit of electricity. To this day, vast areas and millions of people in the world have yet to be connected to electricity.

It’s hard to imagine modern life without electricity. In fact, I suppose the very definition of modern life is based upon electricity. What would your home or workplace be like without electricity? Even those things outside the power grid system, like cars and planes and boats, have their own electrical systems. Our communications systems rely on electricity. The computer is a machine that manipulates electrical current. After food, water and shelter, one could make a case that electricity comes next as a necessity.

I’m making two points here. One, electricity is relatively new. Two, electricity has become mandatory for modern life, and will always be in demand. If there is a problem with electricity, it comes from too much demand. That’s because it is easy to consume electricity – there are thousands of ways. Unfortunately, it’s not so easy to produce and transport, so balancing electric demand with supply has become a problem. Producing and transporting electricity in a clean and cost-efficient manner has become a major challenge. It is a challenge that will be with us forever. We burn fossil fuels to produce most electricity. But these fuels are finite and dirty.

Demographics suggest continued strains on electric supply and an almost insatiable demand. Look at California. Even the relatively clean source of hydropower has its limitations.

The purpose of this short discourse on electricity is to show clearly that the balance between electric supply and demand will remain critical as far as the eye can see. No effort will be spared to make the production and transmission of electricity easier and more cost efficient. Silver will play a huge role in increased productivity and cost efficiency. The silver investor could get a real boost from some generally unknown developments in electrical transmission.

You have seen me write that, among all the elements, silver is the best conductor of electricity, the best conductor of heat and the best reflector of light. Even though the main industrial use for silver, photography, is non-electrical in nature, and even though there are numerous applications for silver unrelated to silver’s electrical conductivity, it is its electrical applications that hold so much promise for the future.

What I’m attempting in this piece, is to peer into the future. I’m not going to talk about what is currently occurring in the silver market. I’m not going to talk about how, presently, we can’t satisfy current silver demand and must keep dipping into inventories to close the “gap”, much as we have had to do for the last 50 years. No, I’m not going to talk about the current shortage, I’m going to talk about the future shortage. I’m going to talk about the new, blockbuster applications that promise to pile onto the demand side in the future.

There are three new applications for silver that could really change the world, and radically add to the already bullish sup-ply/demand equation. The three applications are Photo voltaic (PV) solar electric pro-duction, all electric or petrol/electric hybrid vehicles, and superconductivity. All three have the potential of radically altering the world, and the world of silver. PV technology, the production of electricity by sunlight, needs silver to collect the electricity produced by the flat solar panels, that you see everywhere, from remote telephone booths to remote lighting applications, to homes and businesses. Costs are decreasing for the panels, and demand grows as people realize there is no cleaner and more dependable source of energy than the sun. Electric or hybrid vehicles have critical electrical requirements which only silver can provide. The potential market is so large it is hard to fully comprehend.

It has been known for almost a hundred years that certain man-made compounds, when chilled to extremely low temperatures, can transfer electricity with no resistance whatsoever. Resistivity is how we measure electrical conductivity. When I say silver is the best electrical conductor of all the elements, that means it offers the least amount of resistance to electricity flowing through it. Silver still offers resistance to electricity, but less than copper or any other element. Superconductivity offers no resistance to electrical current. Unfortunately, depending on which super conducting compound (there are several) is used, you have to create an environment hundreds of degrees below zero Fahrenheit. It is said that electricity transferred through copper wires loses as much as 30% of its energy due to resistivity. The excitement and promise of super-conductivity comes from saving the electricity lost in the transmission process.

Everyone would certainly agree that recapturing the electricity lost in the transmission process would be the cleanest and most efficient “production” of electricity we could have. Superconductivity could change the world. And it’s not just saving on the electricity lost during transmission, it is all the possibilities – electrical motors and generators and other devices, which could work with unimagined efficiency. It cannot be understated what a beneficial impact super-conductivity could have on the world.

I’ve followed superconductivity, as it might apply to silver, for 15 years. I’d lost track of it, in the past few years, as there were more compelling aspects to the silver market, and it was always something that stayed in the laboratory. My attention was refocused by a press release from the Silver Institute on June 12, 2001. Since I have been a critic of the Silver Institute in the past, I want to go out of my way to compliment them for the content of the press release (, and for the research effort behind the release. What the Silver Institute reported was that superconductivity had made it from the laboratory to the real world. specifically, under a project half-funded by the US Department of Energy, Detroit Edison installed a 900-lb. super conducting cable, replacing a 25,000 lb. copper cable. The 400 foot cable was manufactured by the Italian firm Pirelli Cable, and the superconducting wires in the cable were produced by American Superconductor, of Massachusetts. The cable, connected to a 70 year old transforming site in the inner-city takes up a fraction of the space and transforms more electricity than the copper cable, with no loss of electricity due to resistivity. This is a high volume application. Fourteen thousand people are served by the cable. The superconducting compound is made of bismuth, strontium, calcium, copper and oxygen, encased in a sheath of silver, cooled by circulating liquid nitrogen. Silver is the most critical raw material in the cable, and get this – silver comprises 50% of the cable’s weight. Of the 900 lb., over 450 lb. is silver.

Just so you don’t think I’m making this up, I’d like to quote a bit of the Silver Institute’s press release dated June 12, 2001 and under the following headline. (But, if you have access to the Internet, please do yourself a favor, and check out the links in the release.) “Silver is Key to Breakthrough in Superconductivity – Silver Demand to Increase Substantially as Technology Expands”

WASHINGTON, DC – For the first time in the 100-year history of consumer electric power transmission, superconducting electric power cables are being installed to serve the public. The cables, which rely on protective sheathing made of silver for transmission of electricity without loss of current to resistance, will serve an inner-city section of Detroit, Michigan.

“Superconductivity will be a critical component in the power grids of the future. Because they carry more electricity in a smaller space, without loss to resistance, and because they are more reliable, super-conducting cables are already being looked at as a means of avoiding the blackouts and brownouts caused by power shortages in California.

“This is only the first installment in a significant new market for silver,” said Paul Bateman, Executive Director of the Silver Institute. “When fully realized in the next decade or so, the superconducting wire market has the potential to consume 50 million ounces of silver or more every year.”

First discovered in 1911, superconductivity allows certain materials under certain conditions – including a temperature of minus 452 degrees Fahrenheit – to conduct electricity without losing current to resistance. Over the next several decades, the search was on for a process that would allow superconductivity to occur at higher, more easily attainable, temperatures. In 1986, researchers at IBM discovered that using ceramics sheathed with silver enabled superconductivity to occur at dramatically higher temperatures.

It’s not just in electricity transmission that superconductors are envisioned. The US Navy has current contracts in place with American Superconductor for development of superconductor motors to power its warships. Can you imagine the strategic advantage a warship with a superconductor-based propulsion system would command over a conventionally equipped counterpart?

If 50 years of deficit consumption and the vaporization of just about all verified and documented silver inventories weren’t enough to convince you to invest in silver at the lowest inflation adjusted prices in 5000 years, you’ve just been given powerful new reasons to reconsider. Ask yourself these questions: Regarding superconductivity -What region of the world wouldn’t be interested in substantial and recurring savings and efficiency in electrical transmission? Regarding Photo voltaic electric generation -What region of the world wouldn’t be interested in producing energy directly from the sun in the cleanest and most reliable manner. Regarding electric cars – What region wouldn’t benefit from electric, rather than fossil fuel powered vehicles? The common denominator in the three most promising energy solutions for the future is silver. In a rational, non-manipulated market, even if silver was operating in a surplus, and not a deficit, the market would have responded to such powerful possible future developments already. Silver should have risen on this news alone. Instead, leasing, the short position and the Silver Users Association have kept the price artificially low. As I’ve said, this is bad for the free market, but very good for you, the silver buyer.

I liken these developments in electrical production, transmission and use, as potentially as dramatic in impact as the truly big events of the past 100 to 150 years. Events like Edison’s invention of the light bulb, or Bell’s invention of the telephone. I say this because these inventions necessitated the creation of a vast infrastructure and touched, relatively quickly, everyone in the world. The revolutionary new ways to produce, transmit and use electricity promise the same. The only difference is, unlike the invention of the light bulb or the telephone, the new technologies offer a way for the average guy to participate, through silver.

I’m not saying I know what the future holds. I am saying, in studying superconductor and alternative energy production for 15 years, it is not surprising my initial hunch, namely, that the best conductor of electricity, silver, would play an important role. Nothing that has transpired in the last 15 years has negated that hunch.

If silver remains as important in superconductivity and alternative energy as it is out of the gate so far, the introduction of this new demand for silver, on top of existing exploding demand, has bullish implications that should send a shiver through a thinking individual. And to those who would say that silver will become too expensive going forward for widespread use in the new technologies, let me say two things. One, I admit, there is too much silver in this first cable. They have to figure a way to use less silver. I don’t think they can eliminate silver, but they must use less. And two, don’t sell short the ability of mass production and innovation in lowering the content of silver and the final total cost. The way I figure it, the first light bulb had to cost tens of millions of dollars. What does a light bulb cost today? The first superconducting cable cost millions of dollars. What will the 10,000th cable cost? Even though silver demand has done nothing but increase over the years, the big kick up in demand may be right ahead of us.

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