Silver may not be as expensive as Gold, but over the years it has held its value just as well, and at times even better than Gold.
Silver is a both a precious metal and an industrial metal, which means the dynamics of the Silver market are complex, and numerous trading opportunities can arise.
Factors influencing price of Silver
- The Silver market is even more complex than the Gold market. The Silver trading price is influenced by the same dynamics that determine the price of Gold, however because Silver is used in several industrial processes there are a few differences.
- Silver supply comes from mines and scrap metal, both of which are dynamic industries. The cost of mining for Silver is rising as the remaining Silver deposits are found deeper and deeper. Low Silver prices lead to lower production, while higher prices leads to higher production.
- Silver was historically used in photography, though this demand has fallen with the advent of digital photography and new printing methods. In fact, silver is now being reclaimed from old photographic film and paper. Silver is also being replaced with cheaper substitutes in older technologies. However, Silver is now also being used in new technologies, including solar energy technologies.
- Like Gold, the Silver price is also influenced by factors that drive the strength of the US dollar, and the risk appetite of global investors. Silver is a safe haven asset, and the price rises when investors become risk averse.
Advantages and disadvantages of trading Silver
Reading a Silver chart
The Silver commodity price has closely tracked the Gold price over the last two decades. The price experienced a multi-year bull trend between 2001 and 2011, though it did fall sharply in 2008 during the Global Financial Crisis.
After the GFC, Central Banks embarked on a period of quantitative easing, which propelled the Silver price to new highs due to speculation about rising inflation. 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.