Current Silver Price

What does “spot price” mean?

The “spot price” refers to the price an investor will pay for the immediate delivery of one ounce of silver. The transaction happens “on the spot,” hence the name. 

When someone says “the silver spot price,” it gives the impression that there is a centralized, authoritative spot price of silver. But this is not the case. The “spot price” is a theoretical estimate of the real-time market value of silver. It is not published by any government or official entity. Rather, individual exchanges and brokerage firms find the closest approximation using different benchmarks, such as futures contracts, silver-backed ETFs, and the LBMA Silver Price. 

The silver spot price fluctuates constantly based on trading activity from marginal buyers and sellers. Retail investors cannot purchase silver at the “spot price” because dealers and brokerage firms always charge a premium or commission over spot.

What does “market price” mean?

The “market price” refers to the price which equalizes supply and demand.  

When market participants are allowed to freely trade an asset, the market price naturally rises to eliminate shortages and falls to eliminate surpluses. At any given time, if the number of people willing to buy outweighs the number of people willing to sell, the price will adjust higher. Conversely, if supply exceeds demand, the price will fall.

What are “bid” and “ask” prices?

When you view a live price for silver, you often see two prices: a “bid” and an “ask.” 

• Ask Price: the lowest price a seller is willing to accept 

• Bid Price: the highest price a buyer is willing to pay 

In most markets, the ask is higher than the bid. 

To understand why, we must understand the role of market makers. Market makers are financial institutions that provide liquidity by quoting both a bid and an ask price for silver. Basically, they buy from anyone that accepts their quoted bid price. Likewise, they sell to anyone that accepts their quoted ask price. 

Market makers set their ask price slightly higher than their bid price so they can earn the difference.  

For example, if silver is trading at $29.00 (bid) — $30.00 (ask), the market maker will buy silver for $29.00 and sell it for $30.00. In this case, the bid-ask spread is $1.00.

How is the current silver price calculated?

There is no centralized, authoritative price of silver. Silver is mined and traded all over the world, resulting in a decentralized market. 

When you see a dealer quote the “spot price” of silver or display a silver price chart (like the one above), they are typically using a combination of reference sources, such as: 

• The NYMEX Continuous Contract Price 

• The LBMA Silver Price 

• Silver ETF Prices 

• Prices from precious metals wholesalers 

For a more detailed explanation of these reference sources, click here. 

In a liquid market with many buyers and sellers, we get the impression of a smooth, continuous, unified price. But it is important to remember that the prevailing price in any market (silver included) is always the result of many individual transactions between marginal buyers and sellers. 

What makes the silver price rise?

The price of silver rises when some event encourages marginal buyers to buy or discourages marginal sellers from selling. 

For example, when interest rates fall, investors tend to buy both gold and silver. Other bullish events include a weakening U.S. dollar, high inflation expectations, and greater demand for physical silver for industrial purposes. When these events occur, demand from buyers tends to outweigh supply from sellers, pushing the market price higher.  

For a more detailed explanation of factors that influence silver, click here.

What makes the silver price fall?

The price of silver falls when a certain event discourages marginal buyers from buying or encourages marginal sellers to sell. 

Rising interest rates, a stronger U.S. dollar, decreased industrial demand, and falling inflation expectations can encourage investors to sell silver (or kick buyers to the sidelines). As a result, supply outweighs demand, pushing the market price lower.  

For a more detailed explanation of factors that influence silver, click here.

What is the silver’s average return?

Since the end of the gold standard in 1971, silver has achieved an average return of 11-13% per year. During the same period, silver had a CAGR of 5.4%. The CAGR does a better job of capturing silver’s extreme volatility.  

Since 2000, silver’s best-performing years were 2010 (up 83.0%), 2009 (up 49.0%), and 2020 (up 47.7%). Silver’s worst-performing years were 2013 (down 35.8%), 2014 (down 19.3%), and 2008 (down 23.4%).

What is the gold/silver ratio?

The gold/silver ratio (or mint ratio) is the price of gold divided by the price of silver. It represents the number of silver ounces required to buy one ounce of gold. If the ratio is 50, gold is 50 times more valuable than silver. 

When the gold/silver ratio is rising, gold is outperforming silver. When it is falling, silver is outperforming gold. 

People track the gold/silver ratio for several reasons. A high ratio indicates that silver is undervalued relative to gold, and vice versa. Historically, the ratio tends to rise during periods of economic uncertainty or deflation (when gold outperforms silver) and fall during periods of economic growth and inflation (when industrial demand for silver increases). 

For more information about trading the gold/silver ratio, click here.

When should I buy silver?

Long-term investors are generally suited to a strategy of buying silver in small amounts over a long period. This approach allows investors to diversify their entry points and take advantage of silver’s explosive bull markets, whenever they come.  

To find entry points for silver, seasoned investors often use the gold/silver ratio. When the ratio is high, silver is undervalued against gold. Investors can also concentrate their purchases when silver is undervalued compared to stocks (Silver/Dow ratio) and/or the money supply (Silver/M2 ratio).

How should I buy silver?

There are many ways to gain exposure to silver, including silver-backed ETFs, futures contracts, and physical coins. 

At Vaulted, we have built the most convenient, secure, and affordable way to own silver. Clients get instant ownership of segregated, serial-numbered bars stored in professional vaults. Clients can buy and sell instantly at the best prices and take physical delivery of their metal at any time. 

Click here to set up your free Vaulted account.