How to start silver trading: the complete guide to trading silver markets

Silver is a precious metal commodity that is widely used as a hedge against inflation or as a safe haven. Discover how to start silver trading, including what moves the value of silver and how to trade silver futures, spot prices and stocks.

What is silver trading?

Silver trading is the method of speculating on the price of silver to profit from any movement in its value. While traditional silver investing would involve buying and holding silver bars and coins, silver trading enables you to gain exposure to the market price without taking ownership of the physical metal.

Most silver trading takes place via futures, spot prices, shares and ETFs. You can take advantage of rising and falling silver prices using these instruments – the further the market moves in the direction you’ve predicted, the more you’d profit and the more it moves against you, the greater your losses.

After gold, silver is the most frequently traded precious metal asset due to its use in electronics, tableware and jewellery. There is also strong demand from investors, who view silver as a much more affordable asset than gold.

Ready to start trading silver? Open an account today.

What is the gold-silver ratio?

The gold-silver ratio is used to asset the proportional relationship between the two precious metals at any given point in time. It measures how much silver is needed to buy an ounce of gold using spot prices. For example, if the ratio is 66, it means you’d need 66 ounces of silver to buy one ounce of gold.

The gold-silver ratio typically rises during bear markets and falls during bull markets. Gold becomes more expensive than silver in economic downturns, as although both are safe-haven assets, gold experiences significantly more attention than silver. Once the economy begins to recover, gold’s value falls back and trades nearer silver’s value again.

Gold has historically always been worth more than silver, but this relationship isn’t fixed. While the price of each metal is influenced by similar factors, this doesn’t mean their prices are correlated. If the gold-silver ratio fell below one, then silver would overtake gold as the most valuable precious metal.

Discover how to start gold trading.

What moves the price of silver?

Silver’s price is determined by supply and demand – if demand for silver is higher than the levels of supply available, prices will rise and if the supply of silver outweighs demand, prices will fall. Silver prices are far more volatile than most other metals, so it’s important to be aware of the factors that impact the market. These include:

  • Economic and political uncertainty: like gold, silver is used as a safe-haven investment in periods of market turmoil. Both precious metals are seen to retain their value while other asset classes decline. This means as inflation rates rise, silver becomes seen as a store of wealth over higher-risk assets
  • Industrial uses: silver is highly conductive, anti-bacterial and extremely malleable, properties which all help create a steady industrial demand. Many of the applications of silver are resistant to economic decline – for example, batteries, water purification and dentistry are all considered essentials regardless of the business cycle
  • The US dollar: as with most other commodities, silver is denominated in US dollars. This means any fluctuations in the price of the greenback can make silver more or less expensive to investors. For example, if the US dollar increases in value, silver would become more expensive to purchase in other currencies and so demand would fall
  • The mining of other metals. Silver is rarely found in its elemental form but is instead combined with other substances such as sulphur, arsenic and galena – a lead ore. As a result, silver is most commonly discovered through the process of mining for other metals. So, any increase in demand for metals such as copper and lead can cause a rise in silver supply

How to trade silver

  1. Create a trading account
  2. Choose which underlying silver market you want to trade
  3. Open your first position
  4. Monitor your trade using technical and fundamental analysis

Whenever you trade silver, rather than buying the physical metal you’ll be using derivative products to speculate on the underlying market price.

Silver spot prices

Silver spot prices enable you to trade the current price of silver, at that exact moment in time or ‘on the spot’. This contrasts with futures, where you’d exchange at a specific price on a future date.

Our spot commodity markets are non-expiring, which means you can see continuous market prices, and trade silver without the need to roll your position on expiration.

See our gold and silver markets

Silver futures

A futures contract is an agreement to buy or sell silver for a set price on a future date. While futures contracts can be used to take possession of the physical commodity, you don’t necessarily have to – futures contracts can be settled in cash.

Traders who hold their silver positions open to the expiry date will either settle their position or roll it over to the next delivery.

Silver futures are available to trade on exchanges across the world, most famously the COMEX exchange in the US. Futures contracts are standardised for quality and quantity – in the case of silver, a standard contract is worth 5000 troy ounces of silver. 

You can trade silver futures with us using spread bets and CFDs on the underlying market. You’d have the same monthly and quarterly expiry dates, and no overnight funding fees to pay – all costs are factored into the spread at the start.

Silver stocks and ETFs

Trading silver stocks and ETFs is a popular way to get indirect exposure to the price of the precious metal.

Silver stocks can include companies that are involved in exploration and mining, as well as those involved in the production of silver for industrial purposes. These companies will usually also be involved in mining for other metals, as silver is a common by-product of other discoveries.

Silver stocks will usually have a positive correlation with the commodity’s price – as when demand for silver rises, these companies earn more from their discoveries. However, as there is a range of metals to consider, it’s important to keep an eye on the demand for those assets too. The company’s growth and stock returns will also influence the share price – these can be influenced by everything from news and earnings releases to production costs and hedging activities. Some major silver industry players include Endeavour Silver Corp and Barrick Gold.

Alternatively, you could get broader exposure to the silver market using an exchange traded fund (ETF). ETFs are bought and sold like a stock, except they take their underlying value from silver or groups of silver stocks.

Ready to start trading silver? Open an account today or practise trading in a demo account. If you’re interested in investing in physical precious metals, check out CoinInvest.

More from Silver

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account