How to Trade Silver in 2022 and When

Feb 14, 2022 12:46 PM ET
How to Trade Silver in 2022 and When

There are a number of rare yet very precious and highly valued metals circulating in the global market. These metals include platinum, gold, and silver. As much as it is less in value compared to gold, silver is preferred by investors because of its favorable price and a diverse number of uses. Silver is normally used to make jewelry and coins, among other things. Silver is traded in the commodity markets, mostly in the US, Japan, London, and mainland Europe.

What is silver trading?

It involves keeping silver tabs to profit from any changes in its price/value. Traditionally, people would buy the physical metal, but now it is possible to gain exposure to the market without really taking silver’s physical ownership. Silver is the second most traded valuable metal after gold. 

What are the factors that influence the price of silver?

  • Inconsistency in supply – considering that silver is a natural resource, its supply is volatile. This means that it has seasons of low availability and seasons of high availability, leading to the fluctuation in price.

  • Demand – a rise in industrial demand for silver will lead to an increase in the price of silver. This would be a perfect time for someone holding silver to sell.

  • US dollar – normally, the price of silver is denoted in dollars per ounce. If the US dollar increases in value, the price of silver will increase in other currencies. 

Why is it important to trade silver?

  • Silver has competitive spreads.

  • It is a low-risk investment.

  • Demand for silver has significantly increased with growth in industrialization.

  • There are various ways to invest in silver; hence if one doesn’t seem to work, the other one will.

  • Silver is highly liquid hence can be traded anywhere across the globe.

  • Even in bad economic times and in political instability, the performance of silver tends to be strong.

  • It has excellent value as it is a rare metal.

What are the steps in silver trading?

Here are simple steps to get you started: 

  • Choose what market to trade.

  • Decide how you want to trade silver.

  • Open a trading account.

  • Monitor how your trade is doing, staying aware of technical and fundamental factors.

What are the ways to trade silver?

Silver bullions

This is the traditional way of investing in silver where one buys the actual silver, say as a bar, jewelry, or coins, and holds it until they are ready to sell. Silver bars are expensive to insure hence making this an economically impractical method.

Spot silver

This method allows one to trade at the current price at that exact moment in time, i.e., on the spot. It is normally denoted as a dollar per ounce, i.e., $/oz. There are a number of factors that can affect the spot price of silver, such as currency, geopolitical events, demand and supply of silver, future speculation, and changes in silver futures. Markets in New York, London, Zurich, Chicago, Hong Kong, and China are where spot prices fluctuate more.

Silver futures

This method allows a buyer and seller to enter an agreement where the buyer will pay a predetermined amount of money for a specific amount of silver that the seller should deliver on a set date in the future. Each of the two parties has a duty to uphold their end of the bargain.  Many people use this method when they speculate prices will go up in the future.

Silver options

In this method, traders make predictions of what will happen to the price of silver. These predictions are expressed through options and are bought at a fee called premium, more like in betting.

There are two types of silver options:

  1. Call option - This gives the right, not the obligation, to buy silver at a specified price and within a given time frame before it expires. The price at which you can buy silver is called the strike price. A trader only gains if the price of silver increases above their strike price. Otherwise, they lose even the premium.

  2. Put option - This gives the right, not obligation, to sell silver at a specified price and before the given time frame expires. A trader earns profits only if their strike price is below the price of silver before the option expires. Otherwise, they lose the premium they paid for the option.

Normally, traders don’t see it to the end of the option in an attempt to mitigate the risk of making losses. The goal is to gain from your trade. Selling the call option or put option before its expiry helps lock a profit. 

Silver Exchange Traded Funds

This is where a trader can invest in passively managed funds that invest loads of assets into physical silver then closely keep tabs on the price of silver in the commodity market.

Silver stocks

This involves a trader investing in stocks of companies that mine silver. This means that if the company increases production, your benefits from the stocks you own increase. With the rising demand for silver, the company sells more silver, and stockholders get higher dividends and capital gains.

When is it best to invest in silver?

Silver trading hours depend entirely on where a silver market is listed. The price of silver fluctuates with changes in demand in the market. When trading volumes increase, so does the volatility of silver. This is the best time to trade as one is bound to get maximum profit from their investment. An increase in trading volumes can be caused by such factors as overlapping market hours of various markets. A rise in trading volumes causes changes in price hence an opportunity to profit and a risk to lose.


Silver is preferred by traders over gold because of its many uses and considerably fair price. The steps of trading are quite easy and seamless. The market is highly volatile hence a great opportunity to make profits speculating. It is more profitable to trade silver during high-demand periods.

Don't miss: The Best Forex Robots in 2022

Best Forex Robots

Best Forex Brokers