Here is what I found on the internet. I hope I'm not wrong, you might want to check other MSDS just to be sure
Quote*
Silver nitrate is toxic and corrosive. Little exposure to the chemical will not produce
immediate or even any side effects other than the purple skin stains, but with more
exposure, side effects will become more noticeable. It is very poisonous and can
cause burns. Long-term exposure can cause permanent blue-grey staining of eyes,
mouth, throat and skin, (argyria) and may cause eye damage. Short contact can lead
to deposition of black silver stains on the skin. Besides being very destructive of
mucous membranes, it is a skin and eye irritant.
Silver compounds, such as silver acetate, silver nitrate, silver arsphenamine, can be extremely toxic in the
human body due to the extremely high concentration of silver. All silver compounds used, for a variety of
reasons, place a user at risk for argyria.
The risks associated with use of high PPM silver compounds have been very well documented. Most
compounds available today contain an extraordinary amount of actual silver content (as measured in grams or
micrograms).
So all in all it seems a bad idea to have it on your pencil.
http://www.silverperoxide.com/silver%20toxicity.pdfWhere I got it from, I was lazy so clicked the first link that came up on google