The change in silver prices occurs due to a number of factors. Though the silver rates have been steady for the past two decades, there is no role of the historical trends to consider future rates. Investment in silver has further been a great trend in our country where investors acknowledge various determinants that might affect the price of silver and make investments with the view to earning decent profits in the short or long run.
Thought the market of silver is not as big as gold, it has a large number of investors influencing the prices of silver. Warren Buffet when bought 130 million troy ounces of silver back in the year 1997 at the rate of $4.50 per ounce, it had brought in a tremendous impact on the market prices.
Silver mining involves an energy intensive process. Thus, the silver rates emerge correlating with the oil rates which are the primary source of energy in the world. Silver being imported needs an adamant logistics platform with good oil supply. The changing oil prices bring an impact on the change in prices of both gold and silver.
Moving towards the industrialisation era, silver is seen as a spike currently. This is seen to drive the silver prices in the coming future.
Silver is primarily imported to India. Thus, the import duty has a direct effect on the price of silver. High import duty implies high silver rates in the country.
US dollar fluctuation
There has been a severe effect on silver prices due to fluctuation in US dollar. Strengthening USD has lowered down the silver prices in India while the weak dollars have increased their prices.
The price of gold increasing or decreasing has an impact on silver. The increase in gold demand leads to increasing its cost and ultimately increasing silver prices too. Vice versa may also happen.
In the case of increasing imports compared to exports, the situation is termed to be a trade deficit. Rising deficit makes the govt take steps to curb it leading to increasing prices of silver.
Gold and silver have always been a priority for investments to help them out during times of financial stress leading to inflation. Thus, the prices of silver tend to increase when the inflation rates are high.
The quantity of silver is measured in troy weight or grams. IT is sold in troy ounces, million, ounces, kilograms, grams, tonnes, metric tonnes, tola, etc. the fineness of silver is measured as the percentage of silver available in the alloy. Its fineness is 900; then it means it has 90% of silver. Thus, the fineness is put into 1000 parts. Usually, copper is added to silver to make it more durable. It may also be measured in carats like gold.