Different from gold, silver is not traded but it is just a financial asset. This wonderful product has very extensive industrial use. Most investors take on to silver trading for the potential to benefit from market price fluctuation. Now in this post, we take a closer look at the basics of silver trading.
Reasons for silver trading
There are three main reasons why traders and investors buy silver. The reasons include;
- As an investment– Many investors choose to invest in silver because gold has become very expensive on the market. So they buy silver and sell it when the price rises.
- As a hedge against inflation– Silver has recently gained popularity on the market because it is the only product that is affordable. Previously, traders and investors mainly focused on trading but due to the increasing price of gold on the market, many investors have been convinced to take the risk and start trading silver.
- Another reason why silver trade has gained a lot of popularity is that almost half of the demand for silver is constituted of industrial demand. This now means that even if the investment market gets a blow, silver can still be sold to the industries.
Factors that determine the price of silver
Three main factors determine the value of silver on the market. They include;
- Demand and supply of silver– Similar to many commodities on the market, the price of silver is also determined by the level of demand and supply. When the demand is high and the supply is low, the price will automatically rise up, the inverse is also true. Demand can be industrial for the metal.
- US Dollar value– Since silver is traded in dollar value, its price is also determined by the dollar value. Its price is inversely proportional to the dollar value. The higher the value of the US dollar, the lower the price of silver. This is seen as an advantage for bullish investors and traders to buy-in.
- Technology– The industrial application of silver includes green technology and solar photovoltaic systems which happens to be a great demand nowadays. Therefore, the demand for silver is directly proportional to the demand for its industrial applications and hence affecting the price
Conclusion
If you are an investor or a trader and you are looking where to invest then silver trading is the perfect investment you can try. When everyone else is running for gold you go for silver because at this time gold would be expensive due to the limited supply. Invest in silver when it is still available at low prices.
Tell us your opinion, do you trade silver? If you do kindly tell us your opinion in the comment section below and also tell us your experience with silver trading.
