Silver is well qualified as a precious metal. It is often underestimated, yet it has considerable potential. It happens that the price of silver and the yellow metal are in strong competition. That is to say, when the price of gold falls, the smartest investors invest on the silver side. But before investing in silver, it is important to understand why the price of silver rises and falls.
Silver price variation: supply and demand
The price of silver and yellow metal works the same way in terms of variation. The price of silver depends on supply and demand. This is more explicitly translated as follows:
- Supply follows demand: the price is stable;
- Supply no longer follows demand: the price rises and becomes more expensive;
- Demand is low: the price falls because stocks are full.
These two determining factors also depend on various other factors. Generally, it is supply that impacts the price of money, because demand is always stable. Experts say that in a few years' time the silver reserves may run out, so supply may be very limited.
New technologies
Currently, some technologies swear by money. It is an indispensable material for most gadgets, because without it, they do not work properly. For example, the industry that makes photovoltaic panels is in dire need of grey metal. It is considered to be a major consumer. So the price of money is going up because of these new technologies that use it in mass. However, we can also deal with the opposite situation. Indeed, some technologies are trying to get out of the silver addiction. They are looking for ways to limit their need, and this is the case in the photography and film industry. There is a drop in demand and the price of money drops at the same time.
World growth and the American currency
The evolution of the price of money depends considerably on economic expansion as well. All over the world, jewellery made of silver, gold and other precious metals is very popular. However, when purchasing power declines, there is a reduction in the purchase of jewellery, which in the long run becomes very scarce. The demand for silver is then affected. Apart from this, both silver and gold are influenced by the dollar. The price of silver and yellow metal then varies according to the evolution of the American currency.