Two blogs ago I extolled the virtues of owning physical silver and promised I would amplify on my reason for believing silver has an incredible upside due to its potential in silver/zinc batteries. To follow along, remember that one ounce has 28.35 grams in it. This will be important later on during the pop quiz.
A privately owned US startup company called ZPower, at zpowerbattery.com, says that they have developed a new, patented way of making silver/zinc batteries that will revolutionize the power available for our laptops, ipods, mobile phones and other portable devices.
Their main claim to fame is 40% more runtime at the same power and voltage for the same weight as a lithium-ion, rechargable battery. In addition, the ZPower battery materials can all be recycled easily and safely, while lithium can not, and the battery is not explosive. That is why TSA is in the title of this piece, they have become concerned about the potential threat of a lithium bomb on a plane, and are now limiting batteries at 8 grams of lithium and only one battery allowed in carry on, and only then if it is installed in a laptop. Evidently lithium can explode in the right conditions when mixed with water, I think because the hydrogen given off can explode, but not being a chemist, it's just important to know that the TSA thinks it's dangerous enough that a bomb could be made out of small amounts of it, so, when it comes to exploding, it can and it's dangerous.
Which brings up the GM Volt. GM and others are going to need batteries for electric cars, and hybrid cars, the lighter the better. And, who wants a battery that will blow up in an accident? Or cause a fire at the very least? And if it's to be made safe probably needs even heavier dense plastic or metal shielding around it? Now you're getting the picture, weight in a car, dead weight, reduces mileage and performance, so a lighter silver zinc battery could be a very good thing.
Let's look at how this new battery could impact the price of silver. If the average laptop has 5 grams of lithium in its battery, (http://www.batteryuniversity.com/partone-5.htm), then the equivalent silver/zinc battery would have about 2 grams of silver in it. And lithium ion cell phone batteries have approximately 1 gram of lithium, so a silver zinc battery would have about half a gram of silver.
Annual sales of laptops: roughly 130 million, (you can go to http://www.worldometers.info/computers/ and see a rolling number of computers being sold globally it's about 3 a second or so, it's going up like the national debtometer, really fast!)
Annual sales of cell phone: roughly 1.15 billion.
Potential silver usage in these two products:
Laptops: 130 million times 2 grams is 260 million grams of silver divided by 28.35, (you forgot already didn't you?) is 9.17 million oz. of silver a year.
Cell phones 1.15 billion times 1/2 gm silver is 575 million grams of silver, which is about 20 million more oz of silver each year.
So the new silver zinc battery could potentially increase the demand for silver by 29 million ounces a year. And that's not even starting to figure in the demand for camera batteries, hearing aid batteries, ipod batteries, and what about batteries for the Volt and other cars that need long lasting powerful light weight batteries? If you really want to start getting crazy, about 50 million cars are made a year. If they all end up being hybrids in 10 years, we're talking millions of pounds more of silver demand.
Currently total world silver production is about 600 million ounces a year, (Wikipedia claims 670 million oz. mined a year so I'll use that to be on the safe side) and existing industrial and jewelry demand is roughly 850 million ounces a year, the slack is coming from scrap and old silverware being turned in and melted down, (http://www.gold-eagle.com/editorials_04/scd032304.html)
So now, with the silver/zinc battery, we're going to increase the demand for silver by another 4%. Doesn't sound like a lot, but I predict it is going to gradually drive up the price of silver, because of the utility of the new, longer lasting battery in computers and cell phones, and especially if the price of silver is eventually driven by an exploding, (not literally) demand for silver/zinc batteries in hybrid/electric cars.
How high could silver go in price? Let's work backwards from how much a person would be willing to pay "extra" to have a battery that lasts twice as long. A battery that actually lets you use your computer for an entire five hour flight would have to be worth at least twice current prices, especially when you remember TSA won't let you bring a spare on board. But what would that do to the price of silver? Quite a bit actually.
A lithium ion battery for a laptop costs about $50 now, and a silver/zinc battery would be worth twice as much since it would last twice as long, so it would probably retail for $100. If the new laptop silver zinc battery sells at retail for $50 more than the lithium ion, what kind of cost increase just from the silver would that justify? You can work backwards typically, $50 retail is $25 wholesale which is $12.50 manufacturing cost - a very rough markup measurement used in industry, meaning a $12.50 cost increase due to silver content of 2 grams, or $6.25 a gram, times good old 28.35 grams in an ounce, meaning the demand for these excellent batteries could easily drive silver to a new price of $180 an ounce. This is 18 times higher than current prices. Keep in mind, that's the paper comex price, actual real silver is selling at about $14 an oz. $4 an oz more than spot comex. A coin show in Portland last weekend with over one hundred dealers offered for sale only one, one hundred ounce bar of silver. And that's without the utility of having a battery that is the same weight and twice as powerful. Meaning, if you inherit silverware from grandma, don't sell it! Because...
If these batteries are as great as ZPower says they are, the demand is going to be incredible. You can't buy ZPower stock yet, but when it goes public, snap it up, they have the patent lock on the process that will revolutionize batteries. And maybe make $250 an ounce, maybe $500 an ounce silver, a possibility in the next ten years. Of course there will be a lot of new silver mines going into production, which is great for mining stocks. Did I mention that some silver mining stocks went up 16500 percent during the last silver bull market? (Yes, penny stocks went to $50 and more a share before everything fell apart thanks to the Hunt brothers, but this time I think the demand is going to be real, not someone cornering the market).
But, that's another blog.
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