Silver futures (SI) are a valuable tool for investors looking for a precious metal that serves as an inflation hedge while also possessing many industrial applications.
Silver is the most extensively produced precious metal in history and has been mined for six millennia.
Historically, it has often served as a currency and thus it shares many of the inflation-hedge and safe haven qualities of gold. However, unlike gold, which is primarily used in jewelry, silver is widely used in industry as manufactures capitalize on its superior electrical conductivity.
Each COMEX Silver futures contract represents 5,000 troy ounces of deliverable silver, with a minimum tick price of $10.00 per contract. The contract trades electronically nearly around-the-clock, six days a week, and traders are able to leverage substantial margin efficiencies when gaining exposure to this liquid market.
The production of silver is widely diversified across many countries and continents, which helps prevent surprising variations in supply.
However, as silver production is the byproduct of copper, lead and zinc mining, when those metals experience decreased production, silver often rallies. The demand for silver is largely impacted by needs of the industry.
As the best conductor available, even besting copper, around 50% of silver demand is used in the manufacture of electrical appliances and circuitry.
Consequently, the price of silver often moves in partner with the tech sector and the broad economy. Approximately a quarter of the silver supply is used in jewelry and the tableware products.
These practical applications make silver an attractive addition to a portfolio for its capital appreciation qualities. Additionally, silver’s precious metal status help it rise in price as currencies decline in value, which makes silver an optimal instrument for capital preservation.