Price of Silver

Factors That Impact the Price of Silver

The price of silver changes constantly as silver is traded on the world’s commodities markets. These buy and sell silver prices – or spot prices – can be found on several websites including Kitco and are stated in silver’s price per troy ounce. In recent years, the price of silver has been going up and is expected to overtake the price of gold, according to some predictions.¹ So, why does the price of silver fluctuate? Several factors impact the price of silver and our mail-in gold buyers discuss them below.

What Affects the Price of Silver?

Since silver is a storehouse of value as well as a metal used in industry such as the manufacture of medicines and electrical components, factors impacting the price of silver include economic growth, economic downturns, investor’s speculative behaviors, as well as supply and demand.

1. Supply and Demand

Supply of silver is limited while demand is constant, and this push and pull drive the price of silver. If an increase or decrease in supply or demand is either perceived or actually occurs, silver prices will be impacted. If strikes temporarily decrease supply of silver, prices will go up. If a new technology or device requires the use of silver, demand will go up and so will silver prices.

1. Stable Economic Growth

When the economy is doing well, people are willing to spend more money on silver jewelry and other precious metals. If there is stable growth, particularly in emerging markets, demand for silver typically goes up and there is upward pressure on the price of silver.

1. Economic Downturn

On the other hand, during bad or unstable economic times, job loss and income stagnation drive the demand for silver down. As a result, the price of silver often goes down as well. However, that isn’t always the case. The demand for luxury goods such as jewelry has been known to also go up during tough economic times. High-end market trends serve as an indication of overall economic trends which end up influencing the price of silver.

1. Speculation

Silver for investment can be purchased in several forms including silver bars, silver coins, silver rounds, and investments such as ETFs (exchange-traded funds) or stock in silver mining companies. The speculative behaviors of those who invest in silver can also affect prices. Speculative forecasts by hedge funds, well-known investors, and money managers can drive silver prices up or down. Speculative positioning considers other market factors like the price of gold and expected upturns in the price of silver. These forecasts can increase demand which in turn drive silver prices to move higher.

Why Is the Price of Silver Going Up?

In a stable economic environment, the price of silver typically trades at 1/50th the price of gold so it would take 50 Troy ounces of silver to equal the value of one Troy ounce of gold.  This is referred to as the gold/silver ratio. Currently, the gold/silver ratio indicates the price of silver hovering in the vicinity of 80 Troy ounces of silver to that of one Troy ounce of gold (80:1).²

In recent years, the silver prices have been rising. There are numerous reasons why the price of silver is going up, many of them related to the current health of the world’s economy. Below are some of the major factors driving silver prices up.

1. Record High Gold Prices

There have been record-high gold prices in recent years and they are predicted to continue its upward trend. The same market factors that affect gold prices such as fear of inflation and economic uncertainty also affect silver prices. As a result, as gold prices have gone up, so has silver. Still, silver is cheaper per ounce than gold and so demand for silver has also gone up. Both factors play a part in the rise of silver prices.

1. Buying Defensive Commodities

There was an immense risk to the American and world economies in the years following the recession. Even as the markets slowly recovered, investors, particularly institutional investors, money managers, and hedge funds, drove the silver prices up by buying defensive commodities. As the world continues to go through the coronavirus pandemic and the economic fallout it is expected to lead to, the institutional buying of silver has once again gone up, driving the price of silver up.

How to tell if your gold is real? That is an important question to answer whether you want to sell 18K gold or sell 10k gold. Here at GoldFellow, we are your trusted online mail-in gold buyers who can give you cash for your gold. Our process is simple and secure. Contact us to learn what we buy and what we pay.

Ready to Sell Your Silver?

Do you have silver coins, silver jewelry, or other silver pieces you want to sell? Mail your silver to GoldFellow where you can get cash for your gold or silver. In addition to allowing you to sell your gold online, GoldFellow also purchases sterling silver. Contact us today to learn how you can get cash for your silver.

References

1. Weizhen Tan, CNBC – Gold just hit a fresh record high — but some say silver is set to overtake
2. GOLDPRICE.ORG – Gold Silver Ratio