Silver (XAG) is a precious metal used in jewelry, silverware and electronics. Investors can buy silver in bars, coins and bullion, or speculate on the spot price of silver. Although its chemical symbol is Ag, on financial markets it is known under its currency exchange symbol, XAG. The latest silver charts can be used an indicator of economic health, and the live silver price can help predict the price movements of a range of financial markets, including commodities, forex and stocks.
It is important to understand the factors that move the silver price because they can be complex, and often contradictory.
Like all commodities, the price of silver is impacted by the forces of supply and demand. Humans extract an average of 27,000 tons of silver each year, with China, Mexico and Peru leading the way in terms of production. Large importing nations like the U.S., U.K. and India can demand up to 29,000 tons of silver per year. Any perceived increase, decrease or imbalance can cause movement in silver markets.
A large part of the demand for silver comes from its expanding industrial applications. Silver has the highest electrical conductivity of any metal, which has made it a key component in sustainable infrastructures, such as solar panels.
The silver price is also influenced by global economics. In periods of economic strength, silver prices can rise as people buy more electronics, jewelry and cars that use silver. However, periods of economic and political crisis can also see the price of silver rise, as it is used as an alternative safe haven to gold. Silver’s inverse relationship with the U.S. dollar makes it a popular hedge against inflation – as the price of paper currencies decline, investing in silver can protect against these losses because it retains its value. However, this also means that a strong U.S. dollar can put downward pressure on the price of silver.
Silver mining can be traced back thousands of years, to the first recorded mining activity in 3000 B.C. As its popularity increased, mining operations spread across the world and silver’s uses, and value, multiplied. By the end of the 19th century, humans were producing over 120 million troy ounces a year to fill the demand for the precious metal.
The live silver price wasn’t recorded until the 1970s, when it was introduced at a starting price of $1.80 per troy ounce. Silver’s value rose to $36 in the early 1980s, but soon fell back to below $10, where it stayed for more than two decades. The silver market next reached a significant high point during the financial crisis of 2008, when its price almost doubled to $20 – but it again fell back shortly after. The highest historical price of silver was a rally to nearly $50 per ounce in 2011.
Precious metals, such as silver and gold, have been considered currencies themselves in the past, however, in recent times they have largely been replaced by fiat currencies on forex markets. In today’s market, silver is categorized as a commodity, but the silver spot price is still commonly presented as a forex pair: XAG/USD.
Even if you decide not to trade the precious metal itself, the silver forecast is so closely tied to the global economy that any movement can be a useful indicator for a range of other markets like the US Dollar and gold.
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by Nick Cawley