Like most commodities, the price of silver is driven by speculation and supply and demand. Compared to gold, the silver price is notoriously volatile. This is because of lower market liquidity, and demand fluctuations between industrial and store of value uses. At times this can cause wide ranging valuations in the market, creating volatility.3
Silver often tracks the gold price due to store of value demands, although the ratio can vary. The gold/silver price ratio is often analyzed by traders, investors and buyers.4 In Roman times, the price ratio was set at 12 or 12.5 to 1.5 In 1792, the gold/silver price ratio was fixed by law in the United States at 15:1,6 which meant that one troy ounce of gold was worth 15 troy ounces of silver; a ratio of 15.5:1 was enacted in France in 1803.7 The average gold/silver price ratio during the 20th century, however, was 47:1.8
Year Silver price (yearly cum. avg.9)
US$/ozt Gold price (yearly cum. avg.10)
US$/ozt Gold/silver
ratio
1840 1.29 20 15.5
1900 0.64 20 31.9
1920 0.65 20 31.6
1940 0.34 33 97.3
1960 0.91 35 38.6
1970 1.63 35 22.0
1980 16.39 612 37.4
1990 4.06 383 94.3
2000 4.95 279 56.4
2005 7.31 444 60.8
2009 14.67 972 66.3
2010 20.19 1225 60.7
2011 35.12 1572 44.7
2012 (cum. thru 21 Jan) 29.75 1633 54.9
From September 2005 onwards, the price of silver has risen fairly steeply, being initially around $7 per troy ounce but reaching $14 per ozt. for the first time by late April 2006. The monthly average price of silver was $12.61 per troy ounce during April 2006, and the spot price was around $15.78 per troy ounce on November 6, 2007. As of March 2008, it hovered around $20 per troy ounce.11 However, the price of silver plummeted 58% in October 2008, along with other metals and commodities, due to the effects of the credit crunch.12 By April 2011, silver had rebounded to reach a 31-year high hitting $49.21 per ounce on April 29, 2011 due to economic concerns about inflation and uncertainty regarding bailouts in the Eurozone.13
Silver often tracks the gold price due to store of value demands, although the ratio can vary. The gold/silver price ratio is often analyzed by traders, investors and buyers.4 In Roman times, the price ratio was set at 12 or 12.5 to 1.5 In 1792, the gold/silver price ratio was fixed by law in the United States at 15:1,6 which meant that one troy ounce of gold was worth 15 troy ounces of silver; a ratio of 15.5:1 was enacted in France in 1803.7 The average gold/silver price ratio during the 20th century, however, was 47:1.8
Year Silver price (yearly cum. avg.9)
US$/ozt Gold price (yearly cum. avg.10)
US$/ozt Gold/silver
ratio
1840 1.29 20 15.5
1900 0.64 20 31.9
1920 0.65 20 31.6
1940 0.34 33 97.3
1960 0.91 35 38.6
1970 1.63 35 22.0
1980 16.39 612 37.4
1990 4.06 383 94.3
2000 4.95 279 56.4
2005 7.31 444 60.8
2009 14.67 972 66.3
2010 20.19 1225 60.7
2011 35.12 1572 44.7
2012 (cum. thru 21 Jan) 29.75 1633 54.9
From September 2005 onwards, the price of silver has risen fairly steeply, being initially around $7 per troy ounce but reaching $14 per ozt. for the first time by late April 2006. The monthly average price of silver was $12.61 per troy ounce during April 2006, and the spot price was around $15.78 per troy ounce on November 6, 2007. As of March 2008, it hovered around $20 per troy ounce.11 However, the price of silver plummeted 58% in October 2008, along with other metals and commodities, due to the effects of the credit crunch.12 By April 2011, silver had rebounded to reach a 31-year high hitting $49.21 per ounce on April 29, 2011 due to economic concerns about inflation and uncertainty regarding bailouts in the Eurozone.13
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