Silver as an Investment
Since the start of the 21st Century, increasing silver prices have caught investors’ attention. People look to precious metals, such as silver, to protect themselves from the U.S. dollar’s devaluation or the stock market’s unpredictability. Silver is available for investment in several different forms, including physical silver bullion or paper silver.
The price of silver tells us not only what resources we must allocate to invest in silver on a given day but also helps us understand the intrinsic value of silver as a commodity when taken with the historical price charts. Examining the history of silver’s price per ounce is an excellent indication of its actual value. Knowing the forms of silver and understanding the current silver spot price is crucial to learning market trends and protecting your investments.
What is the Silver Spot Price?
The spot price of silver is the price in the precious metals market that a raw ounce of silver can be bought and sold for immediate delivery. The spot prices are typically listed in USD but can be converted to local currencies. Spot prices change constantly based on world events or market conditions, affecting both buying and selling, making it essential for investors – longtime or beginners – to monitor current prices and other performance indicators. To stay current on market events and news, reading market reports and analyses from experts in the field can help an investor stay apprised of the precious metals landscape.
The spot price of an ounce of silver is not the typical kitchen ounce or the avoirdupois ounce that may come to mind. The price of silver, instead, is always measured in troy ounces. A troy ounce is a unit of measurement first used in Troyes, France, during the Middle Ages. One troy ounce equals 31.103 grams, equivalent to 1.097 avoirdupois ounces.
Here at APMEX, we offer several tools to help investors stay updated with the current silver spot price and the latest updates on their investments. We provide a portfolio tool on our app that allows you to track your precious metals holdings, set up alerts for any spot price or market movements, and notifications on any products you are interested in purchasing, all available with a free APMEX account.
Download the APMEX app for Android and Apple mobile devices to stay up to date with today’s gold and silver prices.
Understanding the Silver Spot Price Chart
Our website and app provide the silver spot price in real-time. Monitoring the spot price of silver is simple, whether you want to check it once daily or once per hour. The historical silver price charts are handy for those who wish to closely follow the ramifications of supply and demand regarding the current silver price. The interactive historical price chart goes back decades and can show you any period as minutely as you wish. Understanding the long-term growth, short-term spikes, and losses is much easier when all the information is at your fingertips.
Understanding the price of silver is made more accessible by viewing our historical charts because the silver prices per ounce when taken as a whole, give investors an excellent indication of silver’s real value over time. You can see its constancy and how silver holdings will grow in buying power over the long haul. A great indicator of silver’s value is its relative buying power. In May of 1987, silver charted at around $9 per ounce. Thirty years later, in May 2017, the silver price chart tells us the silver spot price was just under $17 per ounce. That’s a matinee movie for two, either in 1987 or 2019. Silver prices reflect general prices in our economy well enough that a few moments’ thought will yield many examples of buying-power parity. This is one significant way silver’s spot price over time indicates its intrinsic value of silver.
How is the Silver Spot Price Calculated?
When the worldwide silver spot price is calculated, it is a complex equation with several factors playing into the overall equation. The entities with the most power over the silver spot price do not generally exchange physical precious metals but instead use derivative commodity contracts to determine the price of physical silver. Silver is traded virtually 24 hours a day through many exchanges such as Chicago, Hong Kong, London, New York, and Zurich. The silver spot price is then calculated using the near-term, or the nearest contract with the most volume, futures contract prices.
The most crucial exchange in determining the spot price of silver is the COMEX, a branch of the Chicago Mercantile Exchange. COMEX is the most influential trading market for silver futures contracts and consequently significantly impacts silver’s worldwide fiat currency spot price. Futures contracts for silver on the COMEX represent the projected price of 5,000 ounces on a hypothetical future delivery date. However, most futures contracts are not settled in physical silver but just in cash. Hundreds of ounces of “on-paper” silver are traded on the COMEX for every ounce of physical silver delivered in the real world.
How Often Does the Spot Silver Price Change?
The price of silver changes every few seconds during world market hours. It updates Sunday through Friday, from 6 PM EST to 5:15 PM EST each day. Spot prices remain unchanging for 45 minutes between 5:15 PM and 6 PM each day. While silver may have times when its prices are consistent, it also experiences time periods in which price changes can occur very rapidly.
Changes in silver prices can result from any number of factors worldwide. These factors can include asset allotments, currency inflations, economic events, inflation fears, political happenings, and supply and demand, among countless others.
Why Can’t I Buy Silver at the Spot Price?
When purchasing silver, the product may cost more than the current spot price due to the differences between the bid and ask price and any premiums added to the cost of the silver. Here are some common price terms you’ll see and what they mean:
- Bid Price: The bid price, or buying price, is the price the dealer is willing to buy the silver.
- Ask Price: The ask price, or selling price, is the price the dealer offers to sell that same silver.
- Spread: The spread is the difference between the bid and asking price of a product at the same time on the same day by the same person. For example, if silver was purchased by a dealer for $20 USD and sold the same day for $25 USD, the spread is $5 USD.
The reasoning behind the differing bid and ask prices is when premiums are considered. The premium on spot silver includes the additional costs associated with the item over the spot price, including factors such as fabrication, production, and distribution. While there will always be a premium involved and buying silver at spot price is unlikely, there are sale events where premiums are reduced.
How Does Supply and Demand Affect the Spot Price of Silver?
Supply and demand drive every market force worldwide. Knowing the factors driving the supply and demand of silver is essential to better understanding the price of silver or being aware of any possible future market trends. If supply and demand for silver experience a prolonged imbalance, there is the possibility of a real upset in silver prices per ounce. Investors must understand the relationship between silver supply and demand and the silver spot price.
Current Silver Prices and What They Mean
The expense of gold is increasing the use of silver in the fine jewelry market, and the growing demand for clean energy means there is an exponential demand for silver in the solar industry. Silver is essential to converting the sun’s rays into usable energy, and each solar panel you see requires about a third of an ounce of silver for its manufacture.
These are just two simple examples of the growing silver demand, though there are countless more. For investors watching the silver spot price, this means seeing real competition in acquiring the quantities required for these industries and other related sectors, expressed as higher silver prices per ounce.
In the know investors will thoroughly research the silver supply when planning resource allocations for the coming months. If there is a possibility of a shake-up in silver prices, careful attention to the silver spot price chart is the best way to determine if that possibility is growing.
Gold to Silver Ratio
A common factor mentioned when discussing the price of silver and supply and demand is the gold-to-silver ratio. The ratio is a formula for establishing how many ounces of silver it takes to buy one ounce of gold at any given time by taking the price of gold and dividing it by the price of silver. Investors who use this ratio believe that when the gold-to-silver ratio is high, the market is more silver-friendly, so they increase the amount of silver they purchase during this time and vice versa. Whether or not someone chooses to incorporate this ratio into their investment strategies is an often-referenced ratio one might want to know.
Silver Spot Price in Review
Today’s silver spot price is a composite of worldwide futures markets, primarily the COMEX, representing the underlying real-world precious metal value. The physical silver market, including respected precious metals retailers like APMEX, carefully tracks the spot price of silver, and silver bullion product prices generally hover just above the silver spot price.
