SILVER has often been labeled as the poor man’s gold, coming second only to gold in the bucket-list of traders who want to be on the safe side of investment. Considered a precious metal, silver is not as rare as gold.
Prices of silver have always been cheaper compared to gold but silver, however, is priced for its photography, industrial, jewelry, electronics and elsewhere on top of its role in finance, raising its significance for an investment portfolio.
Like in Gold Trading, when you trade Silver, the measurement of the precious metal is in Dollars per ounce. One standard lot in Silver trade is known to be 5000 ounces, 50 times more than its commodity counterpart, Gold, in which 100 ounces are representative of one standard lot.
The Global Silver Trade
China , Mexico , Chile , Peru and Australia are the top silver trade producing countries in the world. Over 50%, on the demand side, of the world’s silver trade supply are used in industrial processes, including an array of applications in the electronic sector.
Photographic demand continues to slump, mostly due to less demand from consumers for color film. Jewelry manufacture continues to perform well despite soaring volatile silver trade prices, with remarkable hikes in silver trade demand for China silverware and jewelry.
There are a number of routes to invest in silver trade in addition to options and silver futures. People can buy silver coins, medallions, bullion or silver certificates supported by silver in vaults, if they choose to invest in physical silver.
Traders of silver who would like to show their interest in silver prices through stocks can invest in mining firms, including penny stocks or in silver exchange-traded funds.
Silver trading, like gold trading, is traded at a number of exchange venues around the world, including Dubai , Sydney and Tokyo and major silver futures exchanges like the Comex Division of the New York Mercantile Exchange (NYMEX).
NYSE Euronext, which bought the metals complex including the mini- and full-sized silver futures contracts being traded at the Chicago Board of Trade before the CBOTs merger into CME, is another venue for trading silver futures.
Recently dug out metal gives most of the needed supply of silver, with much of it being a byproduct from mining. Around 75% of the world’s annual silver supply originates from mining production, with the remainder coming from sales of silver stocks from government and from recycled scrap, including the so-called silver coin dishoarding, jewelry and other melted products.
Currency trading and silver trading are alike therefore the availability of the silver option on the currency landscape will attract currency traders and provide alternatives within a familiar working venue.
A Peek Back in Time
Silver was used as a currency by many civilizations who would cast the metal into coins. It has been one of the most sought-after precious metals used in jewelry-making and ornaments before the advent of the paper money.
The value of the silver converted into coins would represent their true worth which in turn could be traded for a variety of commodities, including livestock, parcels of land, and even manpower to build temples and other structures of kings and queens during ancient times.
Silver was used as a form of exchange by Mesopotamian merchants as early as 700 B.C., and the ancient Roman denarius and Greek drachma coins were crafted from silver. The English shilling “sterling,”, on the other hand, symbolized excellence and wealth. Silver in the early days of man symbolized personal status, economic wealth, political influence and power.
The Modern Silver Trade
All this would change when the modern paper currency came into the picture. Fast forward many centuries, silver trade today is totally unique and different. All silver trades now are made against the US Dollar – probably the most powerful currency of the current generation.
Silver trade played a crucial part in the early days of the United States when Congress patterned the currency on the silver dollar and its steady bond to gold. It was used in the US Coinage until it was scrapped in 1965.
Silver trade gained prominence as an industrial raw material at the start of the 20th century when new technology for jewelry, electronics and photography began to surface.
If you are a silver trader, you may want to monitor gold and anything that influences its price as the gold and silver trades tend to move together in the market as both as both commodities are influenced by what may happen to the USD.
When the USD is depreciating, Silver trade is thought to increase in a positive manner as the many more may be taking long positions in Silver trades due to the appeal that is brought on due to the fact that a Silver trade now in many other currencies is cheaper due to the devaluation of the USD against their currency. I.e. as Silver trades are performed against the USD, that means that, for example, my Euro (that has subsequently appreciated against the Dollar) can now be used to purchase more Silver through a Silver trade.
Of particular importance for the prices of these two precious metals are government economic reports, such as quarterly GDPs, Producer Price Index figures and Monthly Consumer Price Index that measure the trends and any other fluctuations that affect the country’s economic growth and sway the Gold and Silver trades.