Silver is a precious metal like gold. It is used in companies as well to make jewelry. There are a number of applications of gold in the industry and for the manufacture of consumer goods.
Silver is also used in thermal conductors and electrical equipment’s and this finds a lot of use in the electrical industry. Silver is used in medicines and is also used as a substitute for gold because it is less expensive than gold.
Supply and demand
Silver is majorly produced in Mexico, Australia, Chile, Peru, and China. China is today one of the major silver producers.
Silver also finds a lot of use in investment and because of its volatile nature, many traders prefer to trade in silver. Major players look at the demand and supply level of this metal to trade in them. The demand and supply are what creates the price movements in the metal.
The silver prices are affected by the economy as silver finds a lot of uses in industries. When the economy is strong the demand for silver increases and this leads to its price going up. It is also more volatile than gold.
Gold and silver are found in infinite quantity on the earth and thus they are always in demand. These could become more expensive in the future and this is because the natural sources are depleting. Its demand, however, will also increase.
The supply of the precious metals is not dependent on how much gets mined from the earth. This is because gold and silver can be reused. The scrap metal impacts the market and this causes the supply and demand shift even more than what impacts the mining of the metal.
Gold and silver are used by countries for production as well as export and these are imported by the big customers. The metals are used in the industries as well as for hedging against inflation. You need to consider the scrap value too when you trade in this metal because that impacts the demand and supply of the precious metals which in turn impacts the price of the precious metals.
If you are a technical trader then read the long-term chart of the metal to get an idea about the trend of the metal. Take time and go through the chart to understand the dominant trend and then trade with the trend. Watch the price levels and look for the major demand levels on the higher time frame charts to trade the metal. Is it a safe option to trade silver? Yes, it is.