Silver (XAG/USD) - A Report Brought to You by Q8 Trade
What is silver?
Silver (XAG) is a precious metal, a chemical element symbolized by the symbol Ag for the word Argentum or “Argentum”, relative to the state of Argentina where it was found abundantly. Its atomic number 47 with an atomic mass of 107.868, boiling point of 2212 degrees celsius.
Silver is also included in the elements of transition metals in the periodic table in the elements of the fifth session and the eleventh group. Silver has a distinctive color located between white and gray and has distinctive properties.
It has the highest value among metals in terms of electrical and thermal conductivity as well as reflectivity. Silver is found in the earth’s crust either in the form of natural elemental free form or in the form of gold ingots or within the components of some metals such as (Argentite and chlorergite), as well as in various forms such as crystals, crusts, wires, granules, powder, tubes, bars and others.
Silver is slightly tougher than gold and is easily knocked and withdrawn, surpassed only by gold and possibly palladium. Silver is also found in nature on several forms, including pure metal in Norway and Canada, and in the form of silver chloride as in Mexico and Canada, and is usually mixed with some other metals such as gold, copper and lead.
Silver is second only to the “precious” gold. It is considered one of the most valuable and valuable elements on earth and it is one of the most useful elements in modern society. This metal plays an important role in our daily lives because of its higher electrical resistance and thermal and reflective conductivity than any other metal. It has been used for centuries in jewelery, cutlery and coins, and has been used in over 10,000 industrial applications, from microchips to microwave.
As for the electronic industries, silver is used in the manufacture of electrical switches that operate electronically and are also widely used in the medical fields by coating and decorating surgical equipment, in addition to dental fillings. The growing solar industry through solar panels is increasing the demand for silver metal, which is used in photovoltaic cells for photovoltaic panels, and silver demand is expected to increase in the future.
Silver is also used in the manufacture of wall-mounted mirrors as well as advanced telescopes and other industries. Worldwide silver reserves are estimated to be more than 17 times that of gold but are recycled at a much lower rate resulting in limited supply as well as limited resources. Zinc, in addition to the fact that global production has a significant role in influencing their prices.
Silver is one of the most vulnerable metals in manufacturing and commercial activity among the companies that use it, which contributes to its exposure to many price fluctuations. Trading this white metal differs from its yellow cousin but it is very distinct and attracts many investors to it.
Historical overview and price of silver
Given the fluctuations in silver prices over the past 50 years, it is difficult not to notice the extreme rise in prices towards the end of the past 1979 which is also known as the silver peak.
During the 1970’s, its value jumped from less than $1.5 an ounce to about $32 an ounce. By 1980, silver had fallen to its value that it had in 12 months. The silver peak was the result of the Hunt brothers attempting to storm the market amid speculation that the brothers monopolize nearly a third of all silver supply, except for the amounts of silver held by governments.
It is noteworthy that these events are unlikely to occur or repeat again, as there are now more professional players and adults across the global financial markets.
Silver is traded through three major exchanges worldwide:
New York Stock Exchange (NYSE)
London Metal Exchange (LME)
Chicago Board of Trade (CBOT)
Silver trading hours are from 10pm Sunday to 9pm Friday (GMT ) which is equivalent to about 23 hours of trading worldwide.
What affects the price of silver?
Silver is influenced by many factors. It is a natural resource that needs to extracted from the Earth’s crust. As a result, the supply is usually incompatible with the demand for silver and this causes fluctuations in the price of the precious white metal.
In the past few years, Mexico has been considered the main extractor of silver globally. Mexico’s production of this metal amounted to about 5,000 metric tons during 2014 while the United States occupies the leading position in the consumption of silver globally which consumes about 20%. India and China come in second, with a total consumption value of about 18%.
The use of silver is divided into different regions where more than 50% of the silver extracted goes to the film industry and is used to make sensitive materials that reflect light.
There are also other uses in various industries including those needed by the armed forces where the army uses about 500 ounces of silver in the manufacture of each Tomahawk rocket and the equivalent of only 3% in the manufacture of jewelry. The change in demand for any of these sectors leads to a change in silver prices.
Trading silver CFDs with Q8 Trade
Via CFDs, silver like many other financial instruments is not bought and sold physically, but is traded on its price. When trading CFDs, you do not actually own the financial instrument but you can benefit from the change in its value as it is a contract entered into between the you and the platform, while the price is derived from the real price of the financial instrument.
Silver is not a very popular commodity, as not all traders can access it, especially because the minimum amount of silver purchased is 100 units. Trading CFDs and not the product itself allows all traders the ability to take advantage of these commodities.
When buying or selling real silver, people have to invest a large amount of their money. But when trading CFDs one can benefit from a 200:1 leverage which significantly reduces the amount it needs to invest. If there is a decline in commodity prices for whatever reason, those who physically own silver remain owners of a low-value commodity but when there is an open CFD position on silver, all you need to do is close that position, thereby reducing the risk that you can be exposed to.
Why is silver profitable?
Silver is precious metal which has very special specifications. It occupies the second place after gold directly in the precious metals trading sector.
Silver entered hundreds of years ago in many different and diverse industries, the most important of which are jewelry, weapons, machinery and other industries.
Silver is gaining strength after gold from the nature of its use as a jewelery and currency industry and its value increases over time and retains its value despite the fluctuations of economic conditions because it is a limited commodity. North America and South America are among the world’s largest producers of this metal.
Silver has been used in trading as a currency for a long time and globally. Money was coined silver along with gold and silver is still adopted as a currency in some countries to this day. It is considered a safe investment as a result of retaining its marketing value. The symbol XAG is its trading symbol across different trading platforms.
In fact, it has recently become safer than gold largely because of its stability, making some big investors shift from the yellow metal to its white counterpart.
What are the most important factors affecting silver markets?
If you’re a beginner in trading silver then should be aware of all the factors that affect its price, whether negative or positive, so that you can make the right decision in your favor so will be able to make profits and protect your investments from losses.
Large economic crises, especially if the crisis is related to one of the major countries in the production of silver, which of course affects silver prices negatively or positively.
Also, natural disasters and major accidents that are likely to occur in any silver producing country have a clear impact on silver prices as well as on trading volume.
The fact that consuming countries are taking silver as a reserve or introducing silver into industries is causing prices to move naturally by increasing demand for the metal.
Inflation is also another factor. When the rate of inflation increases, investors resort to trading goods that save their money significantly and the top of the list is the silver metal.
Silver is closely linked to gold as any movement of gold affects in the same direction the silver.
The importance of silver trading
Safety is the biggest and most important advantage of trading through silver because no matter how your money is in crisis, it is safe and will not lose anything of its marketing value.
Long-term investment is what makes silver trading important because silver is not an economic balloon and as long as there is patience will reap profits and gains constantly.
Silver trading naturally does not require a large amount of huge funds to start as what you need to trade is not huge amounts.
Silver retains a prominent position in trading markets that are virtually risk free. Therefore, silver is the most appropriate investment in the long run.
How to trade silver?
Unlike gold metal, silver is not only traded as financial assets. This precious metal has large and extensive industrial uses, yet most investors are turning to silver trading to take advantage of price fluctuations. Silver is often called the gold of the poor.
Who are trading silver and why?
Investors and traders are buying silver metal for a number of reasons, including:
- As a hedge against inflation.
- In investment operations.
- As a safety net against financial collapse.
It has not been long since silver became a very popular commodity in the trading markets. In the past, traders focused primarily on gold but the rise in gold prices convinced many of the need to spread investment risk on other investment options of precious metals.
It is worth mentioning that the silver market is very volatile compared to the yellow metal but this precious white metal provides an interesting and impressive hedge against inflation processes and market fluctuations such as gold and the same strength, the additional point and the most prominent advantage is that silver has many advantages but at a lower price compared to gold. Another reason for the prevalence of silver trading is that about 50% of the demand for silver is a demand for some industrial purposes.
There are some key factors to determine silver prices, including the following:
Silver bids and orders – Just like any other commodity, the base price of silver is determined by changes in supply and demand and also includes industry demand for the metal.
Technology – Industrial applications of silver include green technology and solar photovoltaic systems which are currently at high demand rates. The demand for silver is largely proportional to the demand for its industrial applications, and therefore its prices are affected accordingly.
Dollar value – Since silver is priced in US dollars, its price is inversely related to the market value of the dollar. A strong dollar pushes the price of silver lower which is often seen as a great opportunity for bullish traders to buy and trade.