Second, I think investors should focus on iShares. There continues to be strong movement of silver into iShares. Two years ago there was nothing; now there are 180 million ounces of silver in iShares. So long as there continues to be growth in the fund, investor sentiment for silver is likely to be strong.

Third, there's the consumption aspect. Silver's new uses in electronics, batteries, biocides and other applications will be positive for the metal. So, it's often good to be watching what's going on in the press around new consumer products. The Silver Institute publishes a quarterly report that details the new uses for silver as they develop. It's worth keeping an eye out for potential new sources of demand.

TGR: What about on the legislative side?

RQ: That's a good question. As you may be aware, in many jurisdictions around the world, silver, unlike gold, is treated not as an investment but as a commodity which is taxed. For instance, in Switzerland, you can buy physical gold at market value. But if you buy physical silver, you have to pay a Value-Added Tax on top of it. So, it makes it a less attractive investment than gold. Through the Silver Institute, we're looking at initiatives to try and level that playing field.

TGR: Going back to new uses for silver as a commodity, have you heard of any talk of Mitsui working on a silver-based catalytic converter?

RQ: Mitsui has looked at replacing platinum or palladium, which they use in their catalytic converters, with silver because silver is a great catalyst. So far they're looking at only diesel applications, primarily for farm equipment. That's a very small and specific market. But as we all know, once you develop a new use for a commodity, technological advances often follow, which can then lead to wider applications. Mitsui has talked about this initial small market, but using silver in catalytic converters creates a new inroad, and as we know, with higher oil prices and third world economies rapidly developing, there will be more vehicles on the road. If silver is another option for a better environment I think that is positive.

TGR: As the price of silver neared $21 an ounce, did you see an increase in the number of people recycling their silver possessions?

RQ: We'd have to look at some research to answer this question. On a global basis, there's a lot of silver trade going on in India because India is a very large consumer of silver jewelry. When silver prices rise, jewelry consumption tends to dry up a little in India, and we may even see some of that silver come back into the market for recycling.

However, if you look at the actual price point of silver, which is very low relative to gold, the fabrication costs that go into silver jewelry often push the price point of the end product up significantly. If you take an ounce of silver and make it into silver jewelry, you're probably going to end up selling the jewelry at about 5 to 10 times the value of the silver. It's different for gold, because the metal costs so much more per ounce than silver. The fabrication costs put the final gold product at only about two to three times the value of the gold itself. So while it may be worth melting down the gold and recycling it, that's often not the case for silver.

That’s why we don’t often see large movements of physical metal into recycling. Back in the late 1970’s when the Hunt Brothers tried to corner the silver market, silver prices jumped from $3 to $50 per ounce. Silver scrap increased from 130 million ounces in 1979 to 165 million ounces in 1980, and back to 125 million ounces in 1981. So those high prices brought only another 25 percent of additional scrap into the marketplace.

TGR: Would you say that most of the silver recycling now is related to photography?

RQ: Yes, that’s one of the largest sources of recycled silver. I'm involved with a small company that recycles silver from the photographic industry. Hospitals or labs that have old photographs or x-rays on file, will often dispose of them. The silver is recovered and becomes part of the scrap supply network.

Last year about 130 to 140 million ounces of silver were used in photography. We might see 50 percent or more of that recycled.

TGR: On another topic, what's your thinking on nationalization and geopolitics as they relate to investing in silver?

RQ: I think investors have to look at the entire political landscape, whether it's nationalization that occurs at the country level, or regulatory changes at a provincial level. For example, in Alberta, which is considered the conservative bastion of the Canadian economy, they created an excess profits tax last year on fossil fuels. So you can’t tell a developing country that it’s wrong to do something similar. The same applies with respect to mining laws – developed countries can’t expect developing countries to operate by a different set of laws. The resource industry can’t control the regulatory environments of individual countries. There will always be the potential for international regulations that could have a negative impact on operations and profits.

So what do we do? At Silver Standard Resources Inc. (SSRI), we carefully evaluate the geographic areas before we invest in them. We try to choose those countries where there's a long history of mining, such as Mexico, or Peru, or Chile. We look for countries that have an understanding of mining and a recognition of its contributions to the economy in providing jobs and providing the products we use in our everyday life.

TGR: There’s more regulation in developed countries, yet those are the countries where demand is highest, right?

RQ: That’s true. Here in North America we have our electronics, Palm Pilots, flat screen TV’s, etc. that all require silver. We may regulate and shut down mining here from over regulation, but we still want these products. So we have to go to jurisdictions where mining laws support mining development. On the whole, the international mining fraternity operates at a very high environmental standard. Here in Canada and in the United States we have environmental laws that require us to make mining as benign as possible. We export and transport those same standards to all of our operations irrespective of the jurisdiction. We try to be good citizens with the local communities where our projects are located, and I think that if you're providing jobs and being socially responsible, then you don't have to be as concerned about nationalization.

But we all know that every four years politicians change. Mines, on the other hand, are much longer-term projects. So there’s always the potential for shorter term disruption from regulatory or tax law changes.