Broadly, instead of using simple supply and demand, it explains changes in the demand for one asset (a small silvercoin, say) relative to another (a large coin) in terms of changes in the rate of return that the holder of the assets can expect from each.
One reflected the cost of turning, say, an ounce of silver into acoin (this included minting costs plus a government coinage tax known as seigniorage).
In a daily research note Wednesday, Barclays Capital estimated that silver-coin demand globally hit a record high of 3, 800 metric tons in 2011, while U.S. sales hit a record high of 1, 240 tons.
