There are several factors that determine the price of silver in the fluctuating market. According to Web.com Reviews, a few of these factors even work against each other and that makes things even more complex. Here are a few major factors that have a huge influence and drive the silver market.
- Basic Supply and Demand – One of the driving factors of the silver market is something that is elementary knowledge of economics. The supply and demand equation for silver is a bit weird and has resulted in such peculiar prices for the metal. Even though the demand is constant, supply is limited. However, short term changes that occur in supply and demand often drive the prices of silver disproportionally. For instance, if the mining activity of major producers comes to a halt due to strikes, there may be short term spikes in prices. Upward price pressure may also be created if silver has a new use, for example in solar technology or computer chips and generates more buying.
- Technological advances and use – Technology is another important influencer in this equation. While old mundane uses of silver are being replaced with stainless steel alternatives for household cutlery and aluminum alloy alternatives for mirrors, new uses are also emerging every day. For several green applications and solar photovoltaic systems silver is becoming a cheap and useful raw material and as these technologies get more proliferated, the demand for silver spikes.
- Silver Scrap – Light sensitive characteristics of silver made the film and photography industry a huge buyer of the metal. However, the demand has reduced significantly in this sector since non-silver photography has come to dominate the modern landscape. Moreover, as silver prices spike, coins, jewelry, and other silver products are melted or recycled until the market balances out.
- Micro-Economic Trends – When economic conditions are good, people can afford to spend on luxury items with high use of silver, including jewelry, watches, and other items. However, this expenditure is the first one to be cut off as economic activity stagnates or slows down. That’s the reason that the economic health and growth of emerging markets is seen as a prime indicator of this kind of demand.
- Macro-Economic Trends – Along with gold, silver is also seen as a safe haven for investors. That means, they can hold their value better compared to paper currency. This leads to a price hike for these metals during uncertain crises.
- Inflation – Economists, investors, and analysts all understand the gruesome impact of inflation on the value of any portfolio value. Silver, like gold, again has been viewed as a great deterrent against inflation since historic times. While the value of paper currency gets eroded, silver can protect you against such losses.
Web.com Reviews suggest that you monitor all the above-mentioned factors and government policies if you want a shot at the silver market. You should also set your investment targets depending on your goal and expectations.