When & How Does Silver Go Down Or Up In Value?

There's really no answer to this question, I'm afraid. It's like asking when is a stock's price "too high" or "too low." It's all about supply and demand and what the future will hold, and nobody knows what the future will hold.

Historically, silver was worth around $4-5 for most of the 30-year period from the early 1970s to the early 2000s (with an isolated spike to $50 due to market manipulation in the early 1980s). The last few years, however, silver has been worth significantly more. Last year, it rose steadily until it neared the $50 mark once again, but has since tapered off since then. It has gone as high as $32 and as low as $25 in recent months, but seems to be fairly stable lately at around $27-29.

The thing that nobody knows, however, is whether the long-term trend of silver is upwards and the current prices represent a temporary slump, or whether silver prices peaked at $50 and have now started a long downward slide. Or perhaps we are at a new equilibrium and prices will remain relatively stable for the next 30 years. There are plenty of theories about how silver is a limited resource and has many industrial uses and is a hedge against inflation and should therefore rise as the value of the dollar decreases, and for those of us who buy into those theories anytime is a good time to buy since prices will likely be higher down the road regardless of the current price. But we could be wrong. In fact, some of us bought heavily when silver was over $40, thinking it was just going to keep rising and probably feel a bit foolish now that it is back down to $27.

Both great and accurate answers. I wouldnt add a thing. Some research into understanding why the price has been moving the way it has over the last 30 years and you will come up with your own conclusion, thus deciding how to proceed or not to. Cheers.

I am just trying to throw in an opinion here - this is NOT meant to be political and I will do my best to keep this neutral.

People in general know silver and gold are valuable. As the economy worsened in recent years, they were turning towards something they considered crash proof. I know of people who had never looked at PMs who were buying silver and gold out of fear. As the economy of the US goes, so goes the world.

When silver hit close to 50.00 an oz., a lot of online sources can show you there was a massive dump of silver ("paper silver" or not?) back into the market in a very (~impossibly) short time and the prices started a downward trend. There were other factors implemented that seemed to manipulated the prices downward - after all, our backed-by-nothing money becomes worth even less when PMs are in demand. This is intolerable to a system which has the power to make its own money out of thin air and spend it.

The current implemented tactics to "grow" the economy have been proven by history to kill a healthy American economy. It does not matter a person's political affiliation, history shows this is an absolute fact.

I have a feeling (ouch - here comes the political part) that if there is a change in the White House (hope I was nice enough), to begin with, we will see either PMs stay where they are, or they will go down more. It won't actually matter if anything is done to help the economy at the time since peoples' perceptions drive the market. A massive turn over like this- with public perceived mindsets of the different people vying for the position (whether factual or not) - would bring financial optimism. Optimism will likely exist b/c of a common feeling that the mess we are in cannot get worse if we try something in the opposite direction. Again - I am focusing on perceptions, not actually saying what is right or wrong since this is not a political forum.

If there is a turn over in D.C., and economic strategies change to historically proven methods for growing the economy, that PMs will stay lower and possibly go lower than they are now.

If (and I doubt it will happen) we went back onto a gold or silver standard, I am not sure what would happen to PM prices. History has also proven when money is backed by nothing, the system fails. We are there now.

Beware of falling into the trap of valuing everything in an un-backed paper currency that is very easily manipulated. The dollar is relatively high right now but that is most certainly not due to the strength of the US economy or booming exports. That said, it makes a better comparison to compare gold or silver to crude oil or gasoline. Oil at $100 a bbl. is 10x the cost it was when oil was $10 a bbl. Of course, gold was about $160 an oz. back then too. Now, it is $1600 or 10x its old price. Anyone holding gold or silver can still buy the same amount of fuel while those holding paper cannot. Yes, other factors are involved and it can be rather complex but to make examples it is sometimes helpful to use simplifications, even at the expense of some accuracy.

@tgauchshin
Wise words!

@coinwatch



Remember also that you watch the markets and are familiar with them. The PMs were driven up out of a fear that proved to be true. Most people are not familiar with PMs (most cannot even tell you when silver stopped being minted into coins in the US) and will experience euphoria (the falsehood would be something none of us, at this time, can judge with 100% acccuracy). Too many people being out of work etc. makes for a a large public mindset of wanting something to believe in. So a change in leadership, whether public feelings prove to be founded or not, will most likely give that sense of optimism and could result in PM going down (maybe not for long).

I believe the only election scenario that could change things is if, WHOEVER is elected, will study history and go that direction. I also believe we could eventually get out of this mess if it were handled properly. But I have to agree in that I do not think it will happen too soon.

The hard part is not going to be knowing WHAT to do. The most difficult part would be trying to clean house (not picking sides here) when there are so many unconstitutional things already that have been done (not just the recent past) and overlooked. There are so many people in power who only desire to do what is best for themselves rather than do the job they are elected to. Getting rid of a large chunk of the bureaucracy will also make for a much better economy. Again - this is a general, overall statement - NOT aimed in any direction.

When/if the economy is at an OK to good level - PMs stay pretty steady. When people feel threatened by the economy they are in, PMs become a perceived safe haven and prices rise.

So, compared to the 50% loss in the stock market in 2008, you are doing just fine and your PMs are preserving your wealth quite nicely.

Wow... everyone has an opinion, but let me add mine.

Silver is a useful metal for many technologies... The camera industry used to use a lot of it before digital camera's came along. When they were introduced demand dropped dramatically and so did the silver price. When the E-markets crashed a great number of people went from investing in theoretical stuff and moved to commodities and the commodities rose, adding to that China and India started demanding more silver for electronics and other industrial persuits and the price rose further. Maybe uncertainty and mistrust in currencies (Euro having trouble, quantative easing of the Pound and the Dollar has also effected the price with silver and gold looking more solid.

Anyway my point is that just looking at the graphs does not show these influences... silver is not such a rare metal really but there are many uses for it. Tin is another such metal... they are thinking of reopening tin mines in England that have been closed for decades. China and India are still gonna need a lot of materials in their development so I can't see these dropping through the floor just yet.

Silver price is driven by speculation and supply and demand. Compared to gold, the silver price is extremely volatile.