The price of silver depends on market forces such as supply and industrial demand. Other factors, such as the activity of large institutional investors, the price of gold and mining costs, also affect the price.
Gold is one of the main drivers of silver prices. As the demand for gold increases, its price increases, which leads to an increase in silver prices.
Industries and commercial firms use silver for the production of various commodities, including computers, televisions, medals, coins and jewelry. These industries introduce new products almost every day, which causes an increase in the demand for silver, resulting in rising costs.
As of 2015, the price of silver is much lower than gold on the market. Accordingly, it is easier to influence the silver market through large trades and purchases. Large and private institutional investors affect the price of silver through making bulk purchases.
Silver prices also depend on inflation, deflation and devaluation trends, such as changes in the value of the U.S. dollar. When the value of the U.S. dollar is low, the price of silver increases.
The cost of mining silver also impacts its price. When the cost is high, less mining occurs, which reduces the supply. As the net amount of available silver declines, the price increases.