How has the silver price evolved?
Silver price, an economic powerful tool
What influences the silver price?
Before presenting you the silver price for 2012 I will first have a general presentation about silver. First of all, silver can be regarded as an investment just like other precious metals. However, the end of the silver standard had as consequence the decline in popularity for silver as a form of money and store of value. Nowadays silver is mostly used in industrial applications, jewelry, and bullion coins (which are not coins used in daily commerce but as a store of value or as an investment). In Utah people can use silver as a medium of payment recognized by law in order to pay all their debts.
Short history of the silver price
Just like any price of goods, the silver price is formed in a free market due to supply and demand and is also subjected to speculations. If we were to compare the price of silver with that of gold we could state that the price of silver is more volatile because of lower market liquidity and also because demand between industrial and store of value uses fluctuates and as so creating wide ranging valuations in the market.
Nowadays, silver price has various referrals:
- world silver price
- New York silver price
- London Metal Exchange silver price
- spot silver price
- market silver price
- silver bullion price
September 2005 is when the price of silver began to rise steeply from $7 per troy ounce (1 troy ounce = 31.1034768 g) to $14 per troy ounce in April 2006 and in March 2008 settled around $20 per troy ounce which didn’t last too long because the global crisis began. So in October 2008 the price of silver plummeted 58%. It recovered in 2011 and hit the record established 32 years ago - $49.21 per troy ounce. In January 2012 the silver price was $29.75 per troy ounce.
Factors that influence the silver price
- Large traders/investors – a large trader/investor can easily influence the price of silver since the silver market is much smaller in value than that of gold; the demand for silver is estimated at only $15.2 billion/year
- Industrial, commercial and consumer demand – here we can talk about the decline of film photography which was an industry using silver for its development; other industries that use silver are those producing clothing, refrigerators, mobile phones, computers, washing machines, vacuum cleaners, keyboards, countertops, furniture handles, silver-based biocide products. Also the economic evolution of the Western lifestyles can increase the jewelry usage.
- Hedge against financial stress – silver can be used as a shield against inflation/deflation/
To sum up this article, the silver can be used to store wealth because as I presented above the silver rate has largely increased in the overall demand being influenced by large traders and investors, industrial, commercial and consumer demand, hedge against financial stress. The silver price can vary tremendously being more volatile than that of gold so you just need to figure out when it is the greatest time to buy silver, to know when to buy and when to sell.