Metals Market	Gold & Silver	Gold Market	Silver Market
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Investing in the Silver Market

Silver has often been called the poor man’s gold, taking a back seat to gold when traders looked for a safe-haven investment. Silver is considered a precious metal but not as rare as gold. While silver prices have always been far below the value placed on gold, prices of the two metals have generally tracked together as the factors that affect gold also tend to affect silver. Silver, however, has a wider range of uses and is priced for its industrial uses in electronics, photography, jewelry and elsewhere in addition to its financial role, increasing its significance for an investment portfolio.

Like gold, there are a number of vehicles for investing in silver in addition to silver futures and options. Those who choose to invest in physical silver can buy silver bullion, silver coins, silver medallions or silver certificates backed by silver in vaults.

Silver traders who prefer to express their interest in silver prices through stocks can invest in mining companies including penny stocks or in silver exchange-traded funds.

Silver Trading Information

Like gold, silver is traded at a number of exchanges around the world, including Sydney, Tokyo, Dubai and the world’s major silver futures exchange, the Comex division of the New York Mercantile Exchange (NYMEX).

The full-size NYMEX silver futures contract is 5,000 troy ounces of refined silver, not less than .999 fineness, in cast bars weighing 1,000 or 1,100 troy ounces each.
Contract months are the next two calendar months, any January, March, May and September within a 23-month period and any July and December falling within a 60-month period beginning with the current month.
Silver Prices are quoted in dollars per ounce, with the minimum price fluctuation one-half cent per ounce or $25 per contract.
Straddles or spreads are traded in tenths of a cent, equivalent to $5 per contract.

NYMEX also trades a half-size miNY silver futures contract. However, activity has been limited and may not be liquid enough for active traders.

A report on silver warehouse stocks provides a daily amount of silver inventory on hand for possible delivery on futures contracts. A decrease in inventories can provide support for silver prices to move higher.

Another venue for trading silver futures is NYSE Euronext, which purchased the metals complex including mini- and full-size silver futures contracts that were traded at the Chicago Board of Trade prior to the CBOT’s merger into CME Group.

Silver Trading Fundamentals

Newly mined metal provides most of the needed supply of silver, with much of it coming as a byproduct from mining for other metals. About 75 percent of the world’s annual supply of silver comes from mining production, with the remainder coming from government sales of silver stocks and from recycled scrap, including what is termed dishoarding as silver coins, jewelry and other silver products are melted down.

The top silver producing countries are Peru, Mexico, China, Chile and Australia.

On the demand side, about 54 percent of the world’s supply of silver is used in industrial applications, including a variety of uses in the electrical and electronic sector. Photographic demand continues to decrease, mostly due to lower consumer demand for color film because of further inroads from digital photography.

Jewelry fabrication continues to hold up well despite higher and more volatile silver prices, with noteworthy increases in silver demand for jewelry and silverware in China.