Silver may not be as expensive as Gold, but over the years it has held its value just as well, and at times has even exceeded Gold

Silver is both a precious metal and an industrial metal, which means the dynamics of the Silver market is complex with a number of trading opportunities.


Factors influencing price of Silver

Even though the price of silver is influenced by the same factors as the price of Gold, there are still a few differences as Silver is used in several industrial processes.

  • The supply of silver is mostly derived from mines and scrap metal, both are very dynamic industries. The cost of mining Silver is rapidly increasing as the deposits of the precious metal are now found deeper in the ground than before. If the price of silver is low then this will lead to a lower production level, whereas, if the price is high then this leads to higher production.
  • Historically silver was used in photography but now with the creation of digital photography and new printing methods, the demand for its use in photography has fallen. In fact, the silver that was used in old photographic film and paper has now been reclaimed. Silver has transitioned into being used in new technologies, especially solar energy technology.
  • Just like Gold, the price of Silver is impacted by factors such as the strength of the US dollar and the risk appetite of global investors. Silver is used as a safe haven asset and in times of financial trouble, its price rises and traders turn to the precious metal.

Advantages and disadvantages of trading Silver

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Reading a Silver chart

The Silver commodity price has always been right behind the price of Gold over the past two decades. Between 2001 and 2011, Silver experienced a multi-year bull trend, however, it drops sharply in 2008 during the Global Financial Crisis.

Central banks started a period of quantitative easing just after the financial crisis, which propelled the Silver price to new highs, despite the sacculations about the rate of inflation rising. The Silver price hit a multi-decade high of $49.66 in 2011 when global equity markets corrected sharply. Since then the world has experienced periods characterised by very low market volatility, and lower than expected inflation. This has led to a bear market for Silver.

If volatility or inflation return to world markets, the Silver price could rise again. If not, the bear market may continue.

How can I trade Silver online?

Eightcap offers CFDs on the Silver price, one of the most straightforward methods of trading the precious metal. To learn about trading Silver, you can open a live or demo account with Eightcap and begin following the Silver spot price ticker and the Silver market news.