Understanding the Price of Silver Bullion

2006 AESilver Proof Obv

Silver investors track the price of silver bullion the way that some sports enthusiasts follow the stats of their favorite teams. But for the novice, understanding the price of silver can be confusing. Several factors determine the price of silver, which can change constantly.

The Prices of Silver and Gold Are Connected

The current cost of silver is known as the spot price, which can change several times a day. Traditionally, the price of silver has been tied to the price of gold. Sometimes, the price of silver will go up when the price of gold rises. This is partly due to the fact that both gold and silver can be used as currency across international lines.

Silver’s Value in Manufacturing

Silver is also used in manufacturing because it’s a good heat conductor. Silver is used often in technology. Many items, such as computers, video-game systems, cell phones and tablets, may contain some silver. This makes silver a valuable manufacturing commodity. Like other types of commodities, such as oil or grain, the price of silver rises with demand and falls with supply.

Prices Depend on Supply and Demand

Here’s an example: Let’s say the price of silver has gone up for several years because it’s in demand by manufactures, investors, and government mints using it to create coins. There’s less silver to go around, so it costs more. Then, suddenly, someone finds a new source of silver and begins to sells it on the silver market. There’s more than enough silver, so the spot price goes down. Sources of new silver include mines and previously held silver bullion from stores. Silver from stores isn’t “new” silver; it usually consists of silver coins and bars that have been kept in vaults, out of circulation for many years.

Silver Holds Its Value

The price of silver bullion is a bit more complicated than simple supply and demand because, unlike oil or grain, silver is also used as an investment and as a currency. This means that no matter what happens, silver will still hold value. That’s why many investors choose to keep silver on hand in case of bank failures, war, or natural disasters.

Find Silver’s Spot Price Online

The London Fix is an organization that gives the spot price of silver once or twice a day. Silver’s price used to be based only on the London Fix spot price, but in this world of constant trading, the price of silver can fluctuate much more often. If you’re interested in tracking the price of silver, several websites list the current spot price. Many of the sites update spot prices 24 hours a day.