Silver

Unlike gold, silver is traded not only as financial assets. This precious metal has wide industrial uses. However, most investors are turning to silver trading for the possibility of taking advantage of price fluctuations. Silver is often called the name of the poor gold. Let us take a closer look at the unique characteristics of this wonderful market.

Who accepts the circulation of silver? Why?

Traders and investors buy silver for three main reasons:

  • As a hedge against inflation
  • As an investment
  • As a safety net against financial collapse

It was not long before silver became a popular commodity in the trading markets. Previously, traders focused mainly on gold. However, the rise in gold prices convinced many of the need to spread the risk of investment on other investment options of precious metals.

It is true that the silver market is very volatile compared to gold, but this metal provides an impressive hedge against inflation and market volatility such as gold and the same strength. The additional point is that silver has those advantages but at a lower price compared to gold.

Another reason for the spread of silver trading is that about 50% of demand for silver is a request for industrial purposes. This means that even if the investment market is hit, it is possible to continue selling silver to the industrial sector.

What are the factors influencing the price of silver?

Here are the three main factors that determine the price of silver:

  • Silver display and demand - Just like any other commodity, the basic price of silver is determined by changes in supply and demand. The industrial demand for the metal also includes
  • Technology - industrial applications for silver include green technology and photovoltaic solar systems, which are currently high demand rates. Demand for silver is directly proportional to the demand for its industrial applications and therefore its price is affected accordingly.
  • Dollar value - Since silver pricing is in US dollars, its price is inversely linked to the value of the dollar. The strong dollar is pushing the price of silver down, which is often seen as a good opportunity for bullish traders to buy.

The correlation between silver and gold

Although silver fundamentals differ from gold, there is a strong correlation between the price of gold and the price of silver as precious metals are traded by the same investors. The global financial crisis in 2008 gave gold a clear lead on silver. The price of silver quickly followed gold prices with more volatility. As long as metals continue to trade mostly because of their monetary value, the correlation between their prices are expected to remain.