Silver

Silver is a precious metal that is commonly traded on exchanges or through brokers.

It is much more affordable than gold and thanks to its importance as an industrial metal as well as volatility, is widely traded.

For precious metals traders, gold is a much more popular market. Big institutions buy gold as a currency hedge when real interest rates and yields on other assets become unacceptably low.

Central banks will buy gold, not silver, as a reserve asset to diversify their currency exposure.

Instead, silver functions more heavily as a commodity than a currency.

Silver, also known as the white metal, is commonly linked with gold and the relationship between the two often dictates its price.

The entire silver market is worth about only $540 billion currently, which makes it much smaller than other markets.

Despite its smaller size in market share, the price of silver can oscillate strongly without a lot of money moving into it.

The supply of silver grows only by only 1 to 3 percent each year, and about half the market is consumed through industrial use (unlike gold, which is more limited in how it’s used).

As of August 2020, there are 19.2 billion ounces of silver reserves globally (meeting certain purity standards) against 1.83 billion ounces of gold reserves.

How to Trade Silver

The most common way for retail traders to get exposure to silver is through exchange-traded-funds (ETFs) or contracts-for-difference (CFDs). Both are typical offerings at retail brokerages.

Investing in silver CFDs saves you the inconvenience of paying for silver storage. Moreover, CFDs give you the opportunity to trade silver in both directions.

Many retail investors prefer trading silver through CFDs with brokers as there is no large fee for physical delivery or commission that can erode potential profits.