Silver Trading Overview

Silver is a precious metal, which over the course of history has been used in the production of jewellery, coins, photography and electronics. It has also played an important role in both cultural and religious ceremonies, in the form of holy ornaments and other spiritual items.

Compared to other precious metals, such as gold, silver is one of the world’s most conductive metals, meaning it is highly valuable. While it is not as valuable as gold, it has a lower cost entry compared to the yellow metal.

Trading silver for a currency is known as spot metal trading, which refers to the market value, or cash price of the metal at the very moment it is traded, known as the spot price.

Most investors trade precious metals such as silver because it offers the opportunity to have a diversified portfolio. They also aim at hedging their positions, even when the markets have a downward movement.

Silver Trading – Top Tips

When trading silver markets, as with any commodity, it is important to bear in mind a few important points, in order to trade as effectively as possible.

Select a suitable strategy

It is well worth spending some time deciding on a strategy when it comes to silver trading. For example, choosing a long-term investment in silver or taking advantage of short-term price movements.

Monitor the charts

When entering the silver markets, it is important to be fully briefed on the latest market movements by determining the trend, in order to maximise profits and minimise losses.

Study the gold-silver ratio

It is worth checking the gold-silver ratio when trading silver as it could offer insight into the potential price movements of the two precious metals. The gold-silver ratio is the number of ounces of silver that can be bought for the same price as a single ounce of gold.

Factors that Influence the Price of Silver

Silver prices are not easily influenced or affected by political or economic events. This is because it is viewed as having an inherent value, meaning that its value is protected against times of financial stress or political instability. When compared with gold, the price of silver tends to be much more volatile, while a much higher proportion is used in industry than the yellow metal.

Supply and demand

The price of silver is dependent on supply and demand. In terms of supply, silver has the largest volume, compared with other precious metals. Meanwhile, the mining of silver has substantially increased over the past few years and it is often a co-product of other mined minerals, such as gold and copper.

Industrial production

Due to its wide use in industrial fabrication, in products such as conductors, switches and fuses, silver prices can be affected by industrial output levels in terms of production volume.

Gold prices

The price of silver tends to follow the price of gold. Although this is not a set rule or formula, there is some evidence that a price correlation exists between the two precious metals.

Dollar prices

As the world’s leading currency, the US dollar has an impact on the price of silver. The price direction of the dollar has an inverse effect on silver, meaning that the precious metal can be an appealing investment when the dollar is low.

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