What Are the Issues Affecting the Growth of Silver?


Quick Answer

The largest issue affecting the growth of silver is its popularity as a form of investment. Minor factors, such as silver's industrial uses, the price of gold, the pace of silver mining and regulation in the silver industry, also affect the precious metal's growth.

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Full Answer

Silver is increasingly popular as a form of investment, as of 2015. Commodities traders buy and sell silver in much the same way that stock traders buy and sell shares in corporations, but investment in silver as a hedge against inflation is the primary factor causing the growth of the silver industry. The value of government-issued currency fluctuates wildly during periods of economic turmoil, such as recessions and depressions. On the other hand, silver, like all precious metals, often holds steady or increases in value during these events.

Large investors and financial firms also affect the growth of silver by purchasing large quantities of the precious metal. In 1997, billionaire investor Warren Buffett purchased nearly $600 million worth of silver. In 2008, a silver exchange-traded fund with 180 million Troy ounces of silver reserves began selling shares.

The price of gold is also a contributing factor to the growth and price of silver. The growth of the gold industry and market causes the silver market to grow accordingly. While gold is the most desirable precious metal for investment, silver's lower price and wider availability also make it attractive to investors.

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