(Kitco News) - Although gold's allure as a global commodity is growing as central banks buy the precious metal at an unprecedented pace, it is not the only monetary metal on the market.
Central banks stopped accumulating silver in the mid-1850s, and the world moved off the silver standard by the early 1870s; however, many still see the grey metal as an important financial tool for wealth protection.
One company is looking to bring back silver's luster as a full-fledged monetary metal, as Monetary Metals has launched a new silver bond. In an exclusive interview with Kitco News, Monetary Metals CEO Keith Weiner said that he suspects this is the first silver-based financial loan created in more than 150 years.
The silver loan will support Bunker Hill Mining Corp. as it raises capital to restart and further develop its operations at its Bunker Hill Mine in Idaho. Over its nearly 100 years of operation, the mine produced 165 million ounces of silver.
This loan is unique because it will be paid entirely in physical silver. Under the terms of the agreement, accredited investors will earn a 12% annual yield on the bond over three years.
"It's pretty exciting to offer a silver bond for the first time in 150 years," said Weiner. "We are showing the world that silver is still an important monetary metal. It's not about a new gold standard or silver standard; it's about creating a gold and silver standard. This is the grand experiment we are demonstrating."
Weiner added that silver is an attractive monetary asset because it is readily available with an ample supply of above-ground stocks; at the same time, its low price tag compared to gold means it is accessible to a broader range of investors.
"If you look at the two metals, gold and silver, each one is oriented differently," he said. "Silver is much better for small savers."
The launch of Monetary Metals' new silver bond comes as the gray metal's price has seen a significant run, pushing to a 12-year high above $32 an ounce last month.
Although silver has since dropped into a consolidation pattern, it has managed to hold critical support above its 50-day moving average of around $29 an ounce. Weiner doesn't concern himself too much with the dollar price in silver, saying that the market would have to drop significantly lower to outweigh the returns on a 12% annual yield.
"I think we are starting to see silver attract more investors, and it is likely to outperform gold in this new bull market," Weiner said.
