Silver is a soft, white precious univalent metal typically used in the production of coins, jewelry, photography, and electronics. This highly valuable substance is the highest electrical conductor. It is used in many religions and global cultures, worn as jewelry during important events and traditional ceremonies.
The demand for silver is high and constant, with prices frequently fluctuating due to the several factors that drive silver prices. This is a great resource for understanding silver spot prices so that you can sell or buy silver at a perfect time in order to maximize your gains.
A brief history of silver when it was first used as an asset class
The history of silver when it was first used as an asset class began thousands of years ago. The first recorded silver mining activity was in 3,000 BC. But as the popularity of this white metallic element increased, mining operations began spreading across the world. This resulted in the multiplication and use of silver worldwide.
By the time the 19th century came to an end, up to 120 million troy ounces of silver per year were produced in order to meet vast demand.
However, there was no live silver price recorded until the ’70s. Silver was introduced with a starting price of $1.80 per troy ounce. The value of this precious metal rose until it reached $36 in the early ’80s but fell back to less than $10. This was where its value was pegged for over two decades.
The silver market eventually reached a considerable high point when the financial crisis of 2008 occurred. During this period, the price of silver doubled to $20 but soon fell back again shortly after. The highest historical price of the soft precious metal was a rally to almost $50 per troy ounce in 2011.
Understanding silver prices
To understand the price trends of silver, you need to study several factors carefully. A few of these market dynamics make this study incredibly complex by working against each other.
For instance, when the costs of producing silver reach a particular level, market prices below these costs imply less mining and, of course, less supply. But on the other hand, high silver prices support even more expensive mining and production of this precious metal. This brings about a significant increase in the supply of silver.
Major price factors driving silver prices
The following are some of the significant price factors that significantly drive silver prices:
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Supply and demand
Silver is highly valuable due to its supply and demand equation. Demand is constant, but supply is limited. Basic economic facts assert that actual or perceived decrease or increase in demand or supply moves prices, often out of proportion to the change itself.
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Technology
Existing technologies indirectly and directly move silver prices, thanks to the new uses for this precious metal. This is despite the use of new technology to find an adequate replacement for silver, such as the new variety of aluminum alloys, stainless steel flatware, etc.
New demands for multiple green applications and solar photovoltaic systems make technology a bullish factor for silver prices and demand.
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Silver scrap
Almost gone are the days when photography consumed copious amounts of silver. But since the domination of non-silver photography, there is far less demand now. However, massive stockpiles of photographic film await recycling for their silver content.
Increasing prices result in the selling and melting down of existing coins, silver jewelry, and other silver-laced or silver-based products for rapid addition to the significant market supply of the precious metal.
Other factors driving silver prices include Micro and macro-economic trends, Dollar strength, Inflation, Interest rates, Price of gold, Government policies, etc.
Conclusion
Silver is a precious univalent metal that can be used as a considerable store of value. Its price is notoriously volatile, often caused by some of the factors highlighted earlier.
Since the nature of the markets involves reacting rapidly to these short-term factors, it is highly crucial to watch and follow these rapid and considerable changes.
