Silver prices (XAG/USD) rose on Wednesday, currently trading at $89.44 per ounce, up 5.20% from Tuesday's price of $85.02.

Silver prices are up 25.83% since the beginning of the year.

The gold-to-silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, was 56.62 on Wednesday, down from 58.16 on Tuesday.

Why do people invest in silver?

Silver is a precious metal widely traded among investors and has historically served as a store of value and a medium of exchange. While less common than gold, traders may turn to silver to diversify their portfolios, either for its intrinsic value or as a potential hedge during periods of high inflation. Investors can buy physical silver, in the form of coins or bars, or trade it through instruments such as exchange-traded funds (ETFs), which track its price in global markets.

 

What factors influence silver prices?

Silver prices are affected by several factors. Geopolitical instability or fears of a severe economic recession can lead to a rise in the price of silver due to its status as a safe haven, although to a lesser extent than gold. As a non-yielding asset, silver tends to rise when interest rates fall. Its movements are also dependent on the performance of the US dollar, as the asset is priced in dollars (XAG/USD). A stronger dollar keeps silver prices in check, while a weaker dollar is likely to push prices higher. Other factors, such as investment demand, supply from mines—silver is more abundant than gold—and recycling rates, also influence prices.

 

How does industrial demand affect silver prices?

Silver is widely used in industry, particularly in sectors like electronics and solar energy, as it is among the metals with the highest electrical conductivity, surpassing copper and gold. High demand can drive prices up, while low demand can lower them. The dynamics of the US, Chinese, and Indian economies also contribute to price fluctuations: in the US, and especially in China, major industrial sectors use silver in a variety of processes; while in India, consumer demand for this precious metal in the jewelry industry plays a key role in determining prices.

 

How do silver prices react to gold price movements?

Silver prices tend to be influenced by fluctuations in gold prices. When gold prices rise, silver usually follows suit, given their similar status as safe havens. The gold-to-silver ratio, which indicates how many ounces of silver are needed to equal one ounce of gold, can help determine the relative value of the two metals. Some investors may consider a high ratio an indication that silver is undervalued, or gold is overvalued. Conversely, a low ratio may suggest that gold is undervalued relative to silver.