It’s been a brutal year for precious metals. Despite logging twelve consecutive annual gains, gold and silver are among the worst performing assets this year. Many analysts have lowered price targets, and proclaimed once again that the great bull market is dead. However, precious metals are still highly sought after, even at three miles below the ocean’s surface.
Odyssey Marine Exploration, a world leader in deep-ocean shipwreck exploration, recently announced it recovered more than 61 tons of silver bullion from the North Atlantic this month. The haul consists of 1,574 silver ingots, weighing around 1,100 ounces each, or almost 1.8 million troy ounces in total. The treasure sets a new record for the deepest and largest precious metal recovery from a shipwreck.
The silver was aboard the SS Gairsoppa, a 412-foot steel-hulled British cargo ship that was torpedoed by a German U-boat, and sank in three miles of water off the coast of Ireland during World War II. Including the 48 tons of silver recovered last year, Odyssey has recovered 2,792 silver ingots from the SS Gairsoppa, or more than 99 percent of the insured silver reported to be on the ship when it sank. More uninsured silver may be aboard, but none has been found so far.
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“This was an extremely complex recovery, which was complicated by the sheer size and structure of the SS Gairsoppa, as well as its depth nearly three miles below the surface of the North Atlantic,” commented Greg Stemm, Odyssey’s CEO. “To add to the complications, the remaining insured silver was stored in a small compartment that was very difficult to access.”
Companies such as Odyssey are willing to go to such great lengths to recover precious metals, because hard assets such as gold and silver tend to hold their value exceptionally well over the long-term.
The SS Gairsoppa sank in 1941, a year in which the average price for silver was 35 cents per ounce. However, the average price of silver was $31.15 per ounce last year — down from the previous year, but the second highest price level on record. Overall, Odyssey’s silver haul of 110 tons from the SS Gairsoppa is worth about $77 million today.
Silver is not only known for its historic monetary value, but also for its industrial usage. Almost all electronics are configured with silver. The precious metal is used in everything from automobiles to alternative energy needs. According to The Silver Institute, over 36 million ounces of silver are used annually in automobiles.
In addition, silver paste is used in 90 percent of all crystalline silicon photovoltaic cells, which are the most common type of solar cell. Over 100 million ounces of silver are projected to be used on these solar cells by 2015. The white metal has also been used in medicinal and preservative purposes around the world for generations.
However, on a short-term basis, precious metals can be very volatile. In the second quarter, gold dropped 23 percent to post its largest quarterly loss since America went off the gold standard.
Meanwhile, silver plunged about 31 percent in the same period. However, both precious metals are performing better this month, and have rebounded from the lows made earlier in the year. In fact, gold posted its best day of 2013 earlier this week, surging $43 per troy ounce.
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Disclosure: Long EXK, AG, HL, PHYS