Silver Price in South African Rand ( ZAR )
Silver Price in US Dollar ( USD )
Silver Overview and History
Very few people are familiar with this chemical element which has the appearance of a lustrous white metal. On the periodic table, silver can be found under the symbol Ag with the atomic number 47.
It is the metal with the highest electrical conductivity in addition to thermal conductivity and reflectivity. Silver can be found in its pure and elemental form as an alloy within the crust of the Earth, often found with other metals such as gold.
Silver is valued as a precious metal that can also be found in minerals such as argentite and chlorargyrite and it is often produced as a by-product of copper, gold and lead as well as zinc refining. Alongside gold, Silver is used in the production of bullion coins.
With the discovery lost to history, and it is widely accepted that Silver, along with copper and gold were used as the first primitive forms of money in their elemental form found in nature.
Due to the low structural strength of silver, it was not known to have led the growth of metallurgy and thus more often used either as money, or ornamentally, as could be derived from silver ornaments that were recovered from as early as the fourth century.
This discovery also indicated the early processes to separate silver from lead with the earliest extraction centres in Europe in Sardinia as early as the Chalcolithic period.
During the Middle Ages, Central Europe became the centre for silver production with it having moved to North America by the 19th century in Canada, Mexico, and Nevada in the United States with secondary production taking place in Europe.
By this time, silver deposits were being mined in Siberia, the Russian Far East along with Australia and during the 1970s, Poland emerged as a significant producer after copper deposits rich in silver had been discovered.
With the distribution of silver being significantly more balanced today than it had been, Peru and Mexico are still some of the primary producers of silver, but around one fifth of the supply of silver is now obtain through recycling instead of new production thereof.
Silver – Applications
Apart from being used as coinage throughout the most of history, silver was majorly used to manufacture not only jewellery, but also items for general use such as table silver for cutlery due to the antibacterial properties it has.
Rather than being made out of pure silver, silverware is silver plated by using the method of electroplating. Due to its softer consistency, silver is alloyed with copper with the drawback that it tarnishes easily due to the presence of hydrogen sulphide and its derivatives.
In avoiding tarnishing, silver is often paired with metals such as palladium, platinum, and gold but this can be quite costly so resistance to tarnishing is increased through electrolytically refining pure silver plating.
Silver also has a place in medicinal uses as it has antibacterial and antibiotic properties. It is usually incorporated into wound dressings and used as a coating in medical devices, amidst several other applications.
As it is the most electrically conductive metal, silver plays a significant part in electronics for conductors due to this conductivity regardless of whether it is tarnished.
Other uses for silver include:
- The brazing of metallic materials such as cobalt, nickel, copper-based alloys, tool steels and other precious metals.
- Usefulness in the manufacturing of chemical equipment based on the low chemical reactivity of silver along with high thermal conductivity and its easy workability.
- It is a catalysts for oxidation reactions.
- It is used in traditional photography due to the photosensitivity of silver halides.
- Silver is used in the production of nanoparticles, known as nano silver particles, and
- It is used as food colouring.
How is Silver traded
While gold is currently the most invested precious metal commodity, silver follows in close second. It has been used for centuries and there are several varieties of silver-based instruments that can be traded and invested towards today.
The stock market symbol for silver is XAGUSD as the cost of silver is measured per ounce in terms of US Dollars, and can it be traded in the following ways:
- As silver futures
- Silver options
- Silver exchange traded funds, or more commonly known as ETFs, and
- Other over-the-counter products such as mutual funds which are based on silver.
Silver can be traded on multiple and various exchanges globally with set standard specifications which have to be met. Each market or contract through which silver is traded presents a different angle along with different opportunities to invest in silver.
To give traders an idea of how silver is traded as a standard futures contract when using the Comex Exchange, silver can be classified in three different variants according to the number of troy ounces of silver where one troy ounce represents 31.1 grams of silver.
A full variant contains 5,000 troy ounces of silver, with a miNY containing 2,500 ounces, and a micro 1,000 troy ounces. To get a price quote for a full silver contract, the current price of silver is multiplied by the contract variant to obtain the total contract value.
With this resulting in a substantial amount, futures can now be traded by making use of leverage, providing traders with the opportunity to open positions significantly larger than their available capital.
The leverage that traders have access to will depend on the broker in accordance with the regulatory entity through which they are authorized and regulated with some brokers only allowed to offer leverage of 1:30, and others up to 1:2000.
With leverage provided on financial instruments such as silver, traders can expect there to be a fixed price margin which will be significantly lower than a price quote provided without leverage, allowing traders to open such positions.
Leverage is a useful tool when applied in the correct manner in full knowledge that although it may lead to substantial gains, it also increases the chance of risks which may exceed initial capital.
What determines and affects the price of Silver
The driving factors behind the price of silver depends on various factors with some factors even acting against one another or in accordance with another, making it an extraordinarily complex study.
Some of the factors which are considered by serious analysts and educated investors in silver when making decisions to either buy or sell silver, include, but is not limited to:
- Supply and demand – one of the reasons why silver is so valuable is that the demand for it is constant while the supply thereof is limited.
- The availability of silver scrap – seeing that silver is obtained through recycling instead of new production, the availability of silver scrap contributes to the supply and demand factor.
- Technology – existing and new technologies both act as driving forces for the prices of silver as these technologies depend on the physical characteristics which can only be found in silver, making it utterly irreplaceable.
- Micro-economic trends such as the level of growth and economic health in emerging markets along with Macro-Trends involving national and global trends which may contribute to, or offset supply and demand.
- Inflation which constantly threats the value of paper currency, with silver being used as a hedge against inflation in providing protection against the loss in purchasing power.
- The strength of the dollar as the leading global currency along with the prices of gold, interest rates, government policies, and numerous other factors.
Silver has been used for multiple applications for centuries and it continues to be a valuable precious metal which is traded constantly due to its value and its varied uses.
Despite its value, the price of silver, as with all other financial instruments, is driven by certain forces and markets in which silver is traded can show frequent and severe fluctuations based on the factors that determine the price.
Traders need to ensure that they conduct enough research into silver as an option for trading in the various ways it can be traded to ensure that there is a fundamental understanding before investment is made.