Stock exchange price of silver
Spot price of silver
The price of unrefined silver is called the spot price of silver. This price does not include the percentage taken by the smelters for production silver bars and silver coins, nor the fees of distributors of investment silver. The spot price is the basis for determining all refined products from the mentioned metal, and it changes every second. Graphs of silver price movements are useful to follow when it comes to buying, but also when it comes to selling investment silver, because in this way it is easier to determine the ideal moment for buying or selling this precious metal.
The biggest influence on the movement of the price of silver traditionally has the American and london bullion market, while other silver exchanges have relatively little influence on the final price on the world market.
How do we read the price of silver?
The basic spot price of silver is expressed in US dollars for one Troy ounce of silver (31,1035 grams). Exactly at that price Centar Zlata bases the price of its investment products such as silver bars and coins. In addition to the spot price, the price of the final product is also affected by the costs of minting and distributing investment silver. The difference between the purchase and sale price for the final buyer or seller is not more than a few percent and always follows the spot price on the world market.
What factors affect the price of silver?
As with most other raw materials, the price of silver depends on many factors. Some of them are:
1. Supply and demand
Supply and demand is one of the main reasons why this precious metal holds its value. The amount that the mines produce is limited, and the demand is continuously increasing based on the growth of the world population, the demand for jewelry, and other reasons listed below.
2. Technology
Due to its unique characteristics and properties, silver is almost irreplaceable in industry. One of application of silver is in the production of solar panels that large quantities of this precious metal. Based on the trend of encouraging environmentally friendly and sustainable energy sources, an increase in the price of silver on the global market is to be expected.
3. Economic trends
When the economic situation is very good, the standard of living of hundreds of millions of people in the world increases, and with the increase in purchasing power, the interest in buying silver or gold jewelry also increases. In bad times, interest in buying jewelry falls, but wealthy individuals and professionals buy these metals en masse because of the security they provide, and based on this, the price of silver can rise at an even faster pace than in good times.
4. State policies
States can significantly influence the situation in any market, including the investment silver market, through their laws. All over the EU, currently VAT is paid when buying silver bars or coins, which is why European investors who prefer safety for now invest much more money in investment gold that is exempt from VAT. If the VAT on investment in investment silver is abolished, a large increase in interest in buying this metal is to be expected, and in such situations, the price of silver, as a rule, rises sharply.
5. Strengthening of the US dollar
The price of silver is directly linked to the dollar exchange rate, because it is U.S. dollar the main currency of the price of precious metals. The strengthening of the dollar usually leads to a drop in the price, while the weakening of the dollar favors the growth of the price of this precious metal.
6. The price of gold
Even by a superficial comparison of the graph of the value of precious metals, it can be concluded that when it grows the price of gold, the price of silver also rises, and the reverse is also true. Statisticians would say that the value movement of these two precious metals is positively correlated. But does the price of silver follow the price of gold or does the price of gold follow the price of silver? Another question is what is the cause of such a movement?
Why does the price of silver follow the price of gold?
At first glance, comparing the value of these two precious metals, it can be concluded that the price of silver follows the price of gold, because gold costs approximately 75 times more. Namely, at the time of writing the article, an ounce of gold is worth $1270, while an ounce of silver is worth $16,80. That conclusion is correct, but the cause of this connection between the two precious metals is not the nominal price of an ounce, but the size of the market.
Total value of silver and gold
Although there is approximately 19 times more silver in the earth's crust than there is gold, if you compare just the amount of mined metal available to mankind, there is only four times as much silver. Namely, there are approximately 186.000 metric tons of gold in the world, while there are 777.000 tons of silver. When these quantities are multiplied by the current price on the spot market, the total value of silver is 420 billion USD, while all the gold in the world is worth 18 times more, even 7,6 thousand billion USD.
According to some estimates, daily traffic at gold market is 125 billion USD (including financial derivatives), while the turnover in the silver market is only 9 billion dollars per day, which means that the gold market is approximately 14 times larger. Based on all the above information, it can be concluded that the price of silver follows the price of gold, and not the other way around.
Why does the value of silver follow the value of gold?
The most important reason why silver tracks gold is that they are very similar metals, both in terms of properties and use. Namely, both metals have served throughout history as money and as a means of storing value. Today, they no longer serve as money, but as an investment, but if there were to be a global financial collapse, it is possible that, due to distrust in paper money, the mentioned precious metals would take over their traditional function. For everyday purposes, silver would have to be used more often because there simply wouldn't be enough gold to make enough gold coins for normal use.
This is precisely why in recessions, when bad news about the state of the global economy appears, the value of precious metals rises. When good economic news appears, the likelihood of a return to gold standard, therefore the price of gold falls, and silver naturally follows it.
Given that half of the annual production of silver is consumed in industry, the amount of available bullion and coins is less than the amount of gold, therefore the price of silver moves in larger amplitudes. This means that when the value of gold increases by 10%, the value of silver usually increases by 15 to 25%, and vice versa. Precisely because of its greater use in industry, some investors believe that in the long term the price of silver could rise more than the price of gold, and they decide to invest in investment silver.
Author
centarzlata.com
Notes:
- Every reference on this page to "Centar Zlata" refers to the company Saiva doo
- The texts on centarzlata.com serve exclusively to inform and educate about financial and precious metal markets and should not be considered as investment advice.
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