Silver Prices Trend in the Year 2016 and the Controlling Factors

Silver coins

Silver coins

Silver, a precious metal and also very much valued in the industries due its peculiar properties. Silver is also having high demand among investors due very high fluctuations in the world economy. This precious metal prices in the world market today are dependent on many factors – Supply and demand are the fundamental driving forces, U.S. Dollar Index (DXY), gold silver ratio, global economic scenario, technical indicators of the stock markets across the globe also have a notable impact on its prices.

The first major factor affecting the silver prices – demand and supply – The American Silver Eagle and the Canadian Silver Maple Leaf are official silver bullion coins of the respective countries. If we see the trend in the United States and Canada in the years 2015 and 2016 then the following figures speak a lot :

The total sales of Silver Maples and Silver Eagles together in the year 2015 were 81.3 million ounces against the production of 47.6 million ounces only. This created a huge gap and in turn caused high silver import affecting the price. The constant rising demand of Silver Maples and Silver Eagles is pushing the metal’s price further up. The sale of American Silver Eagles from January 2016 to April 2016 is 27% higher than 2015’s record sales. Similar is the growth in sales of the Canadian Silver Maple Leaf.

Whereas the silver mining figures are plunging. One of the main reasons for a plunge in the production is the production cost; which in the year 2015 was more than the selling cost. The big silver mining companies are struggling to reduce production costs, at the same time they will not like to be in a loss-making business. The demand for silver as a commodity is also rising every day. The countries like India are importing silver in leaps and bounds. The Indian consumer wants to buy this gray metal irrespective of the prices.

The gold/silver ratio – in simple words is, the number of ounces of silver needed to purchase one ounce of gold – is currently at a record high of 74 to 75. The ratio is obtained by dividing the gold price by the silver price. The experts say this ratio will reverse soon, meaning the silver prices are about to start rising, it is also speculated that prices on silver will skyrocket from what it is today.

The economists also say, “The United States Federal Reserve is underestimating inflation. Inflation is likely to take a steep graph and this can cause the U.S. dollar to weaken which will directly affect silver prices and will shoot up”.

In a nutshell whether for jewellery or commodity or investment or due to global economy scenario the silver prices will continue to rise!

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