Are you considering getting into Silver trading? Great! This complete guide will help answer all your questions and show you how to start trading Silver today. But first, let’s tackle the most basic question first.
What is Silver trading?
Silver trading refers to speculating on the price movements that arise as a result of buying and selling Silver bullion on the open markets. Traders usually take positions based on their expectations of Silver’s future price in order to profit from price changes.
💭 A Silver bullion is a bar or coin made purely from Silver.
Unlike traditional Silver investing, which involves buying and holding Silver bars and coins, contemporary Silver trading allows you to gain exposure to the market price without actually owning the metal.
Types of Silver Trading Instruments
When it comes to trading assets like Silver, traders can choose various trading instruments such as Futures, spot prices, shares, and exchange-traded funds (ETFs).
Each instrument comes with its own unique benefits, potential and risks. Using one of these 4 instruments, traders can profit from rising and falling Silver prices.
The basic principle is: the further the market moves in a trader’s expected direction, the greater their profit, and the further it moves against them, the greater their loss will be.
💡 Did you know?
Silver is the most commonly traded precious metal asset after Gold due to its use in electronics, tableware, and jewelry. Silver is also in high demand from investors, who see it as an affordable asset.
Open an account now and start trading Silver to multiply your profits!
Are Gold & Silver related? Is there a Silver – Gold ratio?
The Gold-Silver ratio measures the amount of Silver needed to buy one ounce of Gold at a given spot price. This ratio is used to determine how proportionate the two precious metals are relative to each other at a given moment. For example, a ratio of 55 means that over 55 Silver ounces will be needed for an ounce of Gold.
Silver-Gold ratios typically rise during bear markets and fall during the bull markets. In economic downturns, Gold becomes more expensive than Silver because, although both are safe havens, Gold receives more attention. The value of Gold falls back once the economy recovers, and it trades closer to Silver.
Historically, Gold has always been more valuable than Silver, but this relationship has never been established. Although similar factors influence each metal’s price, it doesn’t mean their prices are correlated. Silver would become the most valuable precious metal if the Gold-Silver ratio fell below one.
What impacts the price of Silver?
The price of Silver depends on supply and demand. If the demand for Silver exceeds the collection available, prices will rise, while if the supply exceeds the market, prices will fall. Therefore, it is essential to be aware of the factors influencing Silver prices since they are much more volatile than most metals.
Uncertainty in politics and economics: Silver is regarded as a safe-haven investment when markets are in turmoil. Both precious metals are seen to maintain their value when other asset classes decline. Consequently, Silver becomes viewed as a store of wealth as inflation rates rise over higher-risk assets.
Industrial Features: Silver has several industrial uses, including being highly conductive, antibacterial, and malleable, all of which contribute to its steady demand. The use of Silver is not affected by economic decline – batteries, water purification, and dentistry are all essentials regardless of economic conditions.
Silver is denominated in US dollars: Just like most other commodities. Therefore, Silver can be more or less expensive for investors depending on the fluctuation in the greenback’s price. Silver’s demand will fall if the value of the US dollar increases, for example, since it will become more expensive to buy in other currencies.
Mining for other metals: Silver is rarely found in its pure form but instead is combined with sulfur, arsenic, and galena, a lead ore. Consequently, Silver is most commonly discovered as a byproduct of mining for other metals. Therefore, any increase in copper and lead demand may result in a rise in Silver supply.
Silver trading: How to get started:
- Open a trading account with a trusted platform like ISA Bullion.
- Deposit your funds and start trading Silver.
- Take up your first position.
- Analyze your trades using technical and fundamental analysis
There are multiple ways to gain exposure to Silver, including trading futures and spot prices, rather than buying the physical metal directly. There are multiple ways to gain exposure to Silver, including trading futures and spot prices, rather than purchasing the physical metal directly.
Trade Silver on the spot
Silver spot prices enable you to trade the current price of Silver, at that exact moment in time or ‘on the spot’.
The most common way to buy and sell Silver is via the spot market. The spot price represents the current value of an asset, for example, a commodity, currency or stock.
Trading on the spot market means buying or selling at current prices, rather than making payments or receiving funds in advance.
The difference between buying and selling on the spot is called ‘bid/offer spread’. This is the amount that a trader pays or receives to complete an order immediately (as opposed to over time). For example, if you wanted to buy one ounce of Silver at $16 per ounce then your total cost would be $1 x 16 = $16. If you wanted to sell one ounce of Silver at $16 per ounce then your total payment would be $16 x 1 = $16.
Trading Silver can be highly lucrative if you know how to invest in Gold and Silver with the right platform. At ISA Bullion, we let our clients trade physical Gold and Silver bullion, no matter where they are in the world.
You can start with the minimum deposit and grow your portfolio at your own pace. You can download the ISA Bullion app and also use our platform directly from your desktop.
Start trading Silver in 4 easy steps today!