SilverPrice.

If you have ever bought or sold silver before, you have likely heard the term “spot silver” before. The spot silver price simply refers to the price of silver for delivery right now as opposed to some date in the future. Keep in mind, however, that spot silver prices do not reflect any dealer or fabricator premiums. Because of this, silver is often purchased for a premium over the current spot price and sold for a discount to the current spot price.

Spot silver prices are typically quoted per ounce in U.S. Dollars. Silver prices can also, however, be quoted by the gram or kilo, and may also be quoted in any currency. Spot silver prices are widely available in newspapers and online. Although some quotes may be delayed, real-time spot silver quotes are very accessible and can provide traders and investors with the most up-to-date market information.

What Determines the Spot Silver Price?

The spot silver price is derived from exchange-traded silver futures contracts. Typically, the most actively traded near month contract is utilized to determine the spot price. These contracts are traded on various exchanges such as COMEX. The important point to keep in mind is that the spot price is for immediate delivery whereas a futures contract is a price for delivery at a later date.

What Causes Changes in the Spot Silver Price?

Silver, unlike gold, is bought and sold by both investors and industrial users. Looking at the investment side of silver demand, there are numerous reasons that investors could look to buy silver. Some of those possible reasons include:

• Low interest rates

• Expectation of price appreciation

• To hedge against inflation

• To hedge against a weaker dollar or currency

Due to the vast difference between current silver and gold prices, silver may be accessible to a much wider variety of investor. The white metal, as silver is often referred to, can potentially provide many of the possible benefits of gold at a fraction of the cost (at current price levels).

Silver is also widely used in modern industry, and it seems that new possible uses for silver are being examined all the time. Industrial demand for silver can also have a significant impact on silver prices, and if that demand continues to rise silver prices could potentially rise along with it.

Some of the current industrial uses of silver include:

• Photography

• X-ray films

• Solar energy production

• Electrical switches

• Chemical production

Non-industrial demand factors that may influence the price of silver include:

• Interest rates

• Currency markets

• Geopolitics

• Mining output

• Monetary policy

• Risk appetite/aversion

• Inflation

Currency markets can potentially have a significant role in the spot silver price on a daily basis. Because silver is denominated in dollars, a stronger dollar can potentially make silver relatively more expensive for foreign buyers. On the flip side, a weaker dollar can potentially make silver relatively less expensive for foreign buyers. That being said, a strong greenback may potentially lead to weaker silver prices while a weak greenback may potentially lead to higher silver prices.

Does Silver Trade All Over the World?

Like gold, silver has been considered a reliable store of wealth and value for centuries. Silver is widely recognized and valued all over the globe, and it trades on numerous exchanges. Like many other modern markets, silver essentially trades around the clock. While traders and investors in the U.S. are sound asleep, silver trading may be active and robust in Asia and other parts of the world.

Why do People Have to Pay Over Spot?

Although the spot price tells you what the current value of silver is, it does not take into account fabricator premiums, dealer premiums and other potential costs. Fabricators that make silver coins, rounds and bars have to buy the raw material and invest capital into making finished product. Silver dealers look to make a profit by purchasing the metal below spot and selling it above spot. The difference, or spread, represents the dealer’s gross profit. Although some products can carry significant premiums over the spot price, other products carry very minor premiums. Certain types of silver rounds, for example, may carry premiums that are less than $1 per ounce over spot. Focusing on silver coin and bullion products with the lowest premiums will help you stretch your investment dollars further and acquire more silver at a lower overall cost-basis.