Silver trading in the stock market is seen as a form money and jewel. Silver is a white, malleable and the most conductive metal available. Silver is less rare than gold, it plays a significant role in affecting currencies and moves in the same sequence as gold. They are a number of stock markets that engage in silver trading. These markets are New York mercantile exchange through its commodity exchange division in open outcry, the Chicago board of trades were it is traded electronically, the Tokyo commodity exchange, the multi commodity exchange and the Dubai gold and commodity exchange.
Silver, which is a rare and precious metal, derives its price from its availability in the open commodity market. This means that the world’s silver production number is a very important consideration on its price. A total number of 15 billion ounces of silver are being produced as of 2006 and as of date, 45 billion ounces are being produced worldwide.
FACTORS THAT INFLUENCE THE PRICES OF SILVER
Silver is fully extracted from ore like copper, zinc and gold. Copper makes up of about 26 % of silver and it is very much dependent on the demand from the commodity housing market. Copper is mainly used in the construction of new homes and any change in the housing market typically affects its demand which also affects the demand of silver and its subsequent price.
The conductivity of silver makes it an important commodity in the electronic industry where it can be used for circuits and switches.
Silver pastes are being used by solar panels to conduct electricity from silicon photovoltaic units which are seen as cost effective sources of energy.
The prices of gold are being tracked by silver even though there is no hard or fast correlation between the two commodities. In price charts, when gold rises and falls, the same thing happens to silver. Silver also represents a method used for hedging currency risks by most investors.
ADVANTAGES OF SILVER TRADING IN THE STOCK MARKET
Online forex trading of silver is continues and functions 24 hours in every day but not involving weekends. Trading silver in the forex market also provides a cost effective margin for traders. It is a cost effective method used to gain exposure to various financial products by forex traders. Silver trading has a high forex market liquidity ratio with an expected daily turnover of 6 trillion dollar. The term high liquidity means that a trader can quickly turn his investment into cash. Trading silver also has a low transaction cost. It necessarily does not involve regulatory fees, exchange fees, insurance fees or transport cost.
In conclusion, silver is seen as one of the most adaptable metal available which is used as both hard asset and as an industrial metal. Trading silver and predicting its price is a balance between a customer’s need and the wants of the market.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.