What Drives the Silver Market?
If you are interested in investing, you have probably looked at a lot of different options. You know that you can invest in stocks, buying up shares of different companies and then getting a return based on how well those companies perform. You can also invest in the forex market, which is driven by the differences in value from one currency to the next. Finally, you can invested in solid, tangible things like gold and silver. While the other markets may make a lot of sense from the outside, have you found yourself wondering what drives the silver market? You could talk to an expert like Bobby Kotick CEO of Activision Blizzard, Inc., but there are some basics that you should know first, which can lay the groundwork for your understanding of the market as a whole.
The reality is that there are a number of different factors. The creation of luxury goods is certainly one thing that you have to think about. People use silver in jewelry of all types. They also use it in things like watches or cufflinks. Silver is not considered to be as beautiful or desirable as gold in most cases, but it certainly has a market; often, the two metals are used together. As long as people are buying luxury items, they are going to be looking for silver.
However, silver actually has a bit wider of a market than just the luxury goods on their own. Did you know that the conductivity of silver – how well it conducts electricity – is actually better than copper? Copper is the standard for wires in most homes, but that does not make it the top choice as far as sheer functionality is concerned. When people need high performance wires, they use silver instead of copper. It does cost more, but it has been used on government projects and civilian projects like.
A big part of this push lately has been through the electronics market. Silver wiring can be used because it conducts electricity so well, but modern electronics – like phones or tablet computers – are so small that they do not need very much silver. This keeps the costs down, all while still providing people with the high conductivity levels that they want to increase speed and functionality over short distances.
On top of that, there are government contracts for silver wire that run far over what civilians would be willing or able to pay. This is particularly true for military projects, where no expense can be spared if the work will help to save lives. These contracts have a big influence on the market by limiting available supplies.
The final thing that contributes to the movement in the market is just the fact that people are willing to invest in it, so the shares rise and fall depending if people are buying or selling. If the price has been rising, people tend to buy, wanting to get in on that rise and earn money. If it starts to dip, they sell off their investments, causing it to fall even more. Smart investors are always watching this organic movement, just like they do with the stock market. However, these investors also know that you have to watch the two other factors at the same time to really grasp the market.