Mar 2012


Mar 2012

Silver Price

By StoneX Bullion

Influences for the Silver Price

The market for silver has a much smaller dimension than that of gold, the demand for this precious metal being estimated at only 15.2 billion US dollars, therefore one of the factors that have a great influence concerning the silver price are the large traders and investors. If we were to give an example for this type of influence that would be the Hunt brothers who in 1980 had a positive influence, determining a spike in the silver price from 5 US dollars per troy ounces to 49.95 US dollars per troy ounces in the short time of a year, a record almost equaled in 2011. So everyone should follow the model of these famous brothers and buy silver.

For the past years silver has been on a positive trend being a means of investment at which many people turn to in order to protect their assets, to guard themselves against financial stress. And as currencies continue to devaluate, more and more people will choose this kind of investment, in a physical form like silver coins and bars and in a non-physical way like futures and mining stocks. The obvious consequence for this fact will be that the silver price will find itself in a continuous uptrend.

Another factor that influences the evolution of the silver price derives from the qualities of this precious metal, is characterized as having the highest electrical and thermal conductivity, which makes silver very used in various industries. Therefore, the industrial demand is an important factor with a great weight in the evolution of the price for this unique industrial and precious metal since 40% of production is used in industries like the photographic one, dentistry, manufacturing electrical appliances, manufacturing water filters, the clothing industry, and of course the jewelry industry which is in a perpetual development. Furthermore, the development and the daily apparition of new uses for silver, manifest a positive influence concerning the silver price.

Evolution of the Silver Price

The most spectacular rise concerning the silver price happened in 2010 when this precious metal experienced an 84% increase in its price. Maybe in the future we will not experience such spectacular increases however the positive trend continues to make its presence noticed as more and more people become holders of silver and as industries manifest the same high demand.

Nonetheless, the evolution of the silver price has had its low moments at it is the case of the Silver Thursday when the precious metal experienced a momentous decrease in the way it was valued from 21.62 US dollars to 10.80 US dollars. Rest assured that nothing indicates that this kind of situation should repeat itself in a near or more distant future.

One reality that assures us of that is that the demand for silver exceeds the supply which is guaranteed by mines or scrap sources. This deficit can only determine people to make investment, to buy silver, and therefore the silver price will do nothing else but increase.

Silver Price Volatility

The silver price is determined by the New York Spot Price and it is the price at which silver is the subject of transactions on the COMEX. It changes daily and in some cases it can be quite volatile being easily influenced by speculations. Other factors that lead to the formation of the silver price are the supply and demand for the precious metal.

We are talking about the volatility of the silver price especially when we compare it with the gold price because silver price is more easily influenced and sometimes a gap is formed between the demand manifested by different industries and the demand manifested by investors which are combined with the low level of liquidity for silver.