Silver price fluctuations

Topics: Gold, Cost, Silver Pages: 3 (881 words) Published: December 11, 2013
Silver is a very ductile and malleable metal used for thousands of years utensils, for trade, and as the basis for many monetary systems. Its value as a precious metal was long considered second only to gold. In Ancient Egypt and Medieval Europe, it was often more valuable than gold. Silver is currently about 1/50th the price of gold by mass, and 70 times more valuable than copper. Silver did once trade at 1/6th to 1/12th the price of gold, however, the discovery of great silver deposits in the Americas. These new discoveries made the price of silver fall dramatically, due to the excess supply prices were forced down, as the demand did not match supply at so high price levels. Demand for silver has changed over the past years. Firstly, the use of high-purity silver for color paper in home and other color printers made the price of silver increase due to a rise in the demand for silver from the printing sector. As more silver was demanded, the price of it could be increased as in this case silver was a “need for the printing sector in order to produce colored paper. So this meant silver was now more price inelastic as prices could go up, meanwhile the demand for the good would not all equally to the rise in price. Moreover, as the demand for smartphones increases, so does the demand for silver, we call this derived demand. Smartphones use silver to produce their micro-chips, so as the demand for smartphones increases, so does the production of these phones, which leads to an increase in the demand for silver. As more phones are produced more silver is needed, so the demand for silver increases. And as the demand for silver increases so does its price.

However, as new industries which involve silver in their production grew, others like the photographic industry, which involves silver in its production, fell rapidly. So this means that the demand for silver did not rise as fast as it could. If the photographic sector grew, prices of silver...
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