Silver is one of the oldest currencies in the world. The little sibling to gold, silver has always been more approachable than the yellow metal. It formed the basis for coins widely used among people who may never have had the chance to hold gold in their hands. Silver is, like gold, a long-term store of wealth, but it works a little differently from gold. Understanding how and why silver prices move the way they do can help investors and collectors profit from shifts in the market.
Silver dealers Silver Gold Bull say that the majority of their bullion sales come from silver, not gold. As surprising as that seems, silver is more accessible, widely seen as undervalued, and has far more room to grow in price. Before you head to Silver Gold Bull to start buying silver coins, find out why silver prices move the way they do.
Speculation is rife on silver futures markets. Almost no one trading in silver futures plans to accept delivery, or even has the ability to do so. That means they are constantly rolling long silver futures into new ones, so that they never have to accept.
Silver futures are hyper-sensitive to news, whether it’s business or politics. Quick traders can take advantage of a volatile silver market.
#2 Interest Rates
With the recent announcement of rate hikes from the Fed, as well as signals that the Fed intends to continue to raise interest rates throughout the year, it’s a good time to invest in precious metals like silver. Silver gained ground immediately following the March announcement from the Fed. The relationship between silver and interest rates isn’t a simple one, but it boils down to this. Rising interest rates mean a silver price rally. Interest rate hikes are associated with depreciating currency and higher risks for lenders, which encourages investors to move toward safe haven assets like gold and silver.
Silver prices have been extremely undervalued in the past few years. It’s no coincidence that interest rates have also been historically low, comparable only the Great Depression and World War Two and never matched before then. As interest rates begin to rise, expect to see fresh movement in silver prices.
Last but not least, silver is a useful commodity. It’s relatively inexpensive and highly valued as a conductor of heat and electricity. It’s both malleable and ductile, both valued chemical properties in a metal. It’s also used in medicine and sterilizers. Almost half of silver demand comes from industry, with the other half going to jewelry and bullion.
The main industrial use of silver used to be photography, but as digital photography took over, silver demand slackened. That’s changed now thanks to the solar power industry. Because silver is such an excellent conductor, it’s a favored material in solar panels.
Now that you know the fundamentals behind the live price of silver, you can start investing with confidence. Markets are complicated and it’s difficult to accurately predict silver price movements. The first step is learning which signs to read. There are other factors to watch as well, including trade imbalances, inflation, and the prices of other commodities. But when you understand these fundamentals, you can put silver to work for you.