What Determines the Price of Silver Bullion?

Silver is aptly classified as a precious metal along with gold, platinum, and palladium. This is because it is rare, valuable, and can be traded for profits. People around the world, especially commodity traders, actively trade silver bullions for profits. Besides that, the bullion is also one of the safest places to store as an asset. Visit website here to know your options.

But what exactly causes silver bullion prices to change? Let’s find out.

5 Factors Influencing Price of Silver Bullion

While there are as many as 10-12 factors that influence the silver bullion price, the following are the major ones. You should always track these metrics if you’re an active bullion trader.

  • Demand and Supply

Every traded commodity (and product, for that matter) depends on supply and demand. If the commodity’s demand is high or supply is low, it’s going to be more valuable and pricier. If demand is low but supply is high, then the value is going to depreciate.

One reason why silver is a precious metal is that demand is constant, but supply is limited. Limited to whatever amount is present on earth and is mined. Silver is used in places like photographic films, solar panels, microchips, etc.

When there’s news that a new silver application has been approved anywhere in the world, then silver prices are likely to go up. Likewise, if there’s a strike at a silver mining facility, there can be a short-term spike in the prices.

But the underlying factor is the supply and demand for silver.

  • Global Economic Trends

Economic trends play a major role in deciding silver’s price. You should look at both microeconomic trends and global-scale macroeconomic trends. Visit the website to learn more about this.

In good economies, people do spend more on jewellery and items where silver is used. Therefore, the price of silver bullion will be higher.

On a global scale, silver is used as a protected investment. Investors gravitate towards gold and silver bullions when the value of paper currency becomes uncertain in an economic crisis.

  • Inflation

Most analysts and economists will agree on some level of inflation in their investment portfolio value. You can find nominal inflation that remains over a long period. To counter that inflation and its effects, silver is hedged against it. Inflation erodes paper currency and its value, and silver protects against those kinds of losses. That’s when the demand for silver goes higher.

  • Institutional Investors

Large investors like Warren Buffet and Hunt Brothers can move the prices of silver bullions. The selling of silver by the Hunt brothers saw a steep fall in silver prices within a few days. This event is termed as “Silver Thursday“. Similarly, Warren Buffet purchasing 130 million troy ounces, which totalled $585 million, saw the silver price going up. When such investors or institutions buy silver bullions, you see a spike.

  • The US Dollar

The US Dollar has an inverse relation with the silver commodity. This is because precious metals are used to hedge against currency risk when there’s an economic crisis. So it will help if you always track the dollar price.

Other factors, like central bank interest rates, government policies, news, and technological developments, also affect silver bullion prices. Visit the website to buy precious gold and silver.

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