Silver is used for everything from medicine to industrial purposes. It has a unique combination of conductivity, pliability and strength that make valuable in the commodity market. What factors influence silver prices? Here are some of the most important things that drive silver prices.
Global Electronics Market
Silver prices are currently driven by a growing demand for electronics. Smartphones, plasma panels and tablets require the unique properties of silver for their manufacture. Silver plays a key role as a conductor in electronic products. Due to its superior conductive and reflective properties, silver is used in computers, cell phones, tablets and many other electronic products.
There has been a significant increase in the interest for sustainable living. As governments are expected to place regulations on energy due to increased concern about global carbon monoxide emissions, the demand for solar panels is expected to grow significantly in the next five years. In fact, Hillary Clinton recently asserted that, if she is elected president, she plans to put the United States on a path towards generating a significant increase in renewable energy by 2027.
Silver is a key element in solar cells as it is a superior conductor of electricity and heat. Therefore, silver prices will likely increase right along with the demand for solar energy.
Silver in nanotechnology is a large emerging industry that is slated to become much more useful in industry. Silver has powerful antibacterial qualities that make it irreplaceable in nanotechnology. Air conditioners, washing machines, air purifiers refrigerators and vacuum cleaners depend on silver nanoparticles to sterilize hundreds of different types of bacteria. Although the use of nanotechnology is still in its infancy, nanotechnology is expected to grow as the full extent of its applications become known. The demand for silver will grow as nanotechnology becomes more popular.
Solid Silver Coins
One indication of increasing investment demand is the market for solid silver coins. The interest in silver coins is high and is expected to remain that way through 2016. Silver coin demand makes up approximately 12 percent of the total demand for silver.
The Price of Gold
The interest in silver is highly correlated with the demand for gold. While there are exceptions, these two precious metals have had very high correlations throughout the years. This is the result of the unique supply-and-demand tendencies of silver. This trend is typically fairly constant over time and is expected to remain that way for the next several years.
Ethylene oxide is a gas that is critical in the production of solvents detergents and plastics. Silver is used as a catalyst in the production of ethylene oxide. Silver demand from the production of ethylene oxide is expected to increase significantly this year. In fact, it is estimated to be 25 percent higher than the demand in 2015. The bulk of demand is expected to come from both the expansion of current ethylene oxide plants in China and new plants in the country, as well. In fact, it is estimated that China will responsible for approximately 80 percent of silver requirements for new ethylene oxide capacity in 2016.
Silver and gold both have similar working qualities that make these metals perfect for jewelry production. It can achieve the most radiant polish of any of the precious metals and has greater reflectivity than gold. Silver is often mixed with small amounts of copper to make it tough and long-lasting for jewelry-making. Pure silver does not tarnish easily. It is sometimes alloyed with base metals and gold.
Globally, silver jewelry fabrication increased for the third year in a roll. The increase in silver jewelry production was the result of high demand from both Thailand and India. North America also had an increase in silver jewelry fabrication this year, reporting a five percent increase.
The above factors will likely drive silver prices to increase as the demand grows over the next five years or more. A large part of the demand for silver comes from the industrial sector, where silver is valuable for an ever-growing variety of applications, from solar power generators to computer chips.