What Influences the Price of Silver

Over the years, silver has been in high demand, and for good reasons. Besides being a precious metal, its industrial uses have dramatically influenced the demand for this metal. Like any other commodity, the price of silver is normally affected by its supply and demand. However, other essential factors also affect its price.

Supply and Demand

The supply and demand for silver are always high. However, it’s a precious metal, meaning its supply is limited. Applying the law of demand and supply here shows that the increased demand for silver is met with profitable market supply. While the future is somewhat uncertain, many experts foresee a continuation of the current price of silver or even an increase.

Inflation

Inflation affects the purchasing power of the affected currency by reducing how much a unit of currency can purchase. When inflation strikes, the value of money tomorrow is less than today’s money. As a result, precious metals can be used to protect against inflation. Silver and gold are good metals that can protect against inflation because they have historical uses as money and stores of value. 

Industrial Uses 

One of the main factors that affect the demand for silver are the industrial uses for the metal. For example, silver plays a crucial role in solar panels by turning light waves into electricity. The auto industry also heavily relies on the availability of silver. Lastly, silver is an excellent conductor of electricity and is used in the creation of semiconductors which are used in nearly all of our electronics. These uses help keep the demand for silver high, and future technological advancements will continue to raise the demand for silver.

Gold Prices

The relationship between the cost of silver and gold goes far back into history. The two metals are highly related, so when the price of gold goes up, so does the price of silver. Some traders even tend to focus more on the gold-silver ratio (GSR) when buying or selling these precious metals. However, the actual strength of the GSR is still debated among buyers.

Silver Scrap

The price of silver is also influenced by the amount of silver scrap available in the market. As more time passes, more silver scrap enters the market and is recycled, which lowers the need for new silver extraction. For instance, film reels have been recycled for their silver content.

Government Policies

Silver has been used as a type of money for centuries. As a result, government actions and policies can affect the metal’s price. For example, when silver production is under the government’s control, it can affect the market value.

Conclusion

Demand and supply factors will affect the price of silver. But as you’ve seen, other crucial factors increase or decrease this precious metal’s price. Inflation, new industrial uses, gold prices, and the availability of silver scrap are just a few of these factors.

If you have any questions about how to acquire bullion or coins, our experts are standing by, ready to help you purchase the next addition to your precious metals portfolio.

**Prices stated in this article are subjective and not intended to project actual value. All precious metal prices are dependent on several factors.**