When it comes to all of the precious metals silver is the least expensive and the most affordable. Why is there such a big difference in price between this vehicle and the others in this category though? Today gold is close to $1,700 an ounce and platinum has a cost that is comparable. The value for this mineral is just a fraction of that at under $50 for the same weight. This was not always the case though, and there were times in the past when this bullion was prized above all others.
One reason for the current spot price is the fact that this metal can be found in almost every region of the world. The value associated with bullion is based partly on availability and rarity, but these are just two of many factors that are considered when the cost is determined. Gold is only found in limited areas, and most of these have unstable political climates and other undesirable conditions that can impact recovery. This is not the case with silver, which is widely available in abundance according to most experts.
Until the 1900s this was the vehicle that rarely went above $1-$2, and the annual average would stay the same for years or even decades. There was very little volatility on the markets and most who purchased the ore held it for an extended period. That is no longer the case, and the current market conditions have driven the bullion up to almost record levels in the last few years.
The industrial demand for this specific choice is high, but the amounts recovered each year help to keep the cost down. There have been some who have claimed that the government has worked to suppress the value of silver on the markets but there has not been any conclusive evidence that this has occurred. A large number of individuals have stated that they consider this specific precious metal grossly undervalued, but with the high level of volatility there are others who do not feel the same way.
In the past silver has skyrocketed beyond other metals that were considered precious, and it is possible that this could happen again in the future. Many enter this sector in the hopes of getting in before the vehicle really takes off, but there are others who are more concerned about having this material if the financial system goes under and the dollar is suddenly worth $0.
Silver has been playing an ever growing role in global trading and financial markets. Although traditionally this was a highly precious metal, it lost this prominent position reportedly at the beginning of the 20th century when prospectors discovered large deposits of silver both in the United States and in other parts of the world. These discoveries meant that for the first time in silver’s history the supply was much higher than the demand, a factor that led to the gradual fall of prices.
In the recent past the main factor that has largely affected values is the global economic downturn. The global economy has been experiencing the worst recession in recent years, a fact that has mostly affected stock markets and most of the other money markets. As opposed to these other markets, precious metals trading remained largely unaffected because it is less liquid compared to the others and thus less volatile and unpredictable.
Further, because gold is more popular in the market, most investors after the global economic recession rushed to invest in it. With more people investing in gold its price sky rocketed which led to other investors opting for silver which is less expensive. In the long run this shift largely boosted costs which had previously stagnated worldwide.
On the flip side, the economic recession has had a more subtle but unrelated effect on the price of silver. This was observed in the reduced use of silver by industries as they tried to downsize their operations in the face of a worsening global economy. Consequently this has led to an increase in the supply of silver, a fact that may lead to a reduction in its price.
Compared to other commodities, silver is relatively stable and secure which has led to increasing demand in it as a trading asset in the world today. Given the few factors that actually affect its price, as opposed to other news and events dependent markets such as the foreign exchange, trading of this metal has a bright future that is set to get better as more and more people invest in it.