About the silver price
Silver trades as two things at once, which is why it rarely tracks gold for long: roughly half of demand is industrial - solar cells, electrical contacts, brazing - and the rest is investment. That split means it can fall while gold rises, because a manufacturing slowdown and a flight to safety pull it in opposite directions at the same time.
Buying and holding silver in Australia
Silver’s practical problem is bulk. It is the least value-dense of the metals traded on the London market, so a holding worth the same as a small gold coin occupies a great deal more space and weighs a great deal more. Everything that is charged by volume or by weight therefore bites harder: vault space, freight, insurance and the packaging needed to keep bars from being marked in transit. Wholesale silver reflects the same problem at its own scale, moving in Good Delivery bars of about 1,000 ounces, which is a piece of metal most people could not comfortably lift.
The London silver benchmark, struck once each day in an auction run by ICE Benchmark Administration, is a poor guide to what a small purchase costs. It prices wholesale metal held in London, not a coin in a drawer. A retail buyer is paying for silver that has been refined into a small unit, minted or stamped, packed and moved. Each of those steps is a larger share of a silver purchase than of a gold one of the same value. The benchmark is struck in US dollars as well, so an Australian figure is that price crossed into Australian dollars, and it can move on a day when silver itself did not.
The tax test is stricter for silver than for either of the other two metals the GST Act recognises. Silver has to be at least 99.9 per cent fine, against 99.5 per cent for gold and 99 per cent for platinum, and it also has to be in an investment form: the same bar, wafer or bullion coin test that applies to all three. Silver meeting both tests is input taxed, so no GST is charged on it. Silver failing either is taxed like ordinary goods, and a great deal of silver fails. Sterling silver, silverware and jewellery are nowhere near the fineness. Proof and numismatic coins fail the other half, whichever metal they are struck from, because their price reflects rarity and finish rather than metal content.
Longer read: The industrial half of silver, and why it behaves like two assets. Most of the silver consumed each year goes into factories rather than vaults, and most of the silver mined each year comes out of mines looking for copper, lead, zinc or gold. Those two facts together explain most of what makes silver unusual.
See other metals and markets on the Australian markets hub.