A beginner’s guide to silver: Price, uses & market overview

Explore a thorough overview of the silver market, learn how it works in simple terms and get to grips with its significance as a popular global commodity.
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Updated: Nov 22, 2023
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On this page, we explore everything you need to know about silver. Gain insights into silver market trends, pricing mechanisms, and the environmental impact of silver. 

Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in silver. 

What is silver?

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Silver is a versatile commodity often called the ‘poor man’s gold’. While it’s significantly cheaper than its gold cousin, silver plays a vital role in finance and industry. Silver is a white metal with a long history of human use. Its shiny and reflective nature has made it a favourite for crafting jewellery, silverware, and decorative items. 

However, its value extends far beyond aesthetics and it is used in various industrial applications, including electronics, medical equipment, and more. In finance, silver is more than just a metal; it’s a store of value. Like gold, silver is used as an investment to hedge against economic uncertainties. 

For centuries, silver has been used as a form of currency, and many investors turned to it for its intrinsic value. Understanding the dynamics of silver can help you appreciate its attractiveness as an investment opportunity. 

Silver market overview

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Silver has been around for centuries, and its value has fluctuated dramatically throughout history. In the 19th and 20th centuries, countries worldwide adopted the ‘Silver standard’, where the metal backed their currencies. In the late 1970s, silver’s value surged when the famous Hunt brothers attempted to corner the market. 

Silver’s value has recently seen steady growth as its appeal as a store of value and hedge against inflation has driven investment. Its use in technology and electronics has further increased its price. Over the past two decades, silver has risen by approximately 300%. 

The silver market today is influenced by various factors. The spot market serves as the immediate exchange for physical silver. Spot silver shows real-time supply and demand. It operates globally and provides a platform for the immediate delivery and settlement of physical silver. Prices in the spot market are quoted in troy ounces, which is the standard measurement unit for precious metals. 

In addition to spot, traders use the futures market to speculate on the future price of silver and to manage risk. Contracts for Difference (CFDs) are popular for retail investors who want to participate in silver trading without physical ownership. 

Is silver valuable? 

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Yes, silver is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.

  • Robust industrial demand. While silver is similar to gold in a variety of ways, its practical uses are far more diverse. Silver has a huge amount of industrial demand, with nearly 500 million ounces going towards things like silver steel, solar panels, water filtration and automobiles. This is reinforced by significant demand in other sectors, including physical investment, jewellery, silverware and photography. 
  • Hedge against inflation. As the cost of living increases, each unit of fiat currency you own becomes worth less than before; this is called inflation, and economic measures like quantitative easing can magnify this process. However, the price of silver tends to increase proportionately to inflation, meaning owning silver investments can protect your capital from the impact of inflation.
  • Store of value. Owning silver allows you to keep some of your capital outside of the traditional banking system and away from centralised control. This is appealing to investors with a distrust of the government and clearing houses, and it means your own real limitation when investing in physical silver is how much space you have to store it.

How to invest in silver

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You can invest in silver by using a silver trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. Some let you buy physical silver, others let you trade silver.  

Silver in your investment portfolio

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A diverse investment portfolio can help protect you during market uncertainty, and the inclusion of silver can add value while allowing you to spread your money across various markets. 

Silver often moves independently to traditional investments like stocks and bonds. You can include silver in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity metals such as silver as attractive options. 

Silver’s use in various growing industries, such as green energy and electronics, makes it a good long term play.

Silver vs other precious metals

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Silver is part of the precious metals family of commodities, including gold, platinum, and palladium. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific precious metals using our dedicated guides below. 

FAQs

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Sources & references
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Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.