Investors all over the world would like to know how to trade silver futures; one way to start is to study silver historical price charts and the events that lead to the movement of silver futures prices.
Silver Futures Prices Affected By Major World Events
When world events affect the financial markets, there are a number of trends that have been historically validated, at least through the last 50 years or so. When these events cause instability and there are fears of inflation and currency devaluation, the so-called, “flight to safety”, for the most part, has universally been to precious metals – gold, and to a lesser extent, its “kid brother”: silver.
There are a number of theories on how to trade silver futures, and one of them is through price cycles. Silver futures prices move in long term price cycles, with many short term interim reversals.
Silver Historical Price Charts Show 5-Years And 10-Years Price Cycles
Trading silver futures, which have historically been priced more cheaply than gold, have been quantified in the past into roughly 5 and 10 year cycles. When looking at a silver futures chart, these patterns that can be recognized, particularly over the last 40 years.
The Hunt Brothers and the Silver Market
Not coincidentally, the silver futures price rose during the 70′s, fueled by the Hunt Brothers’ failed attempt to corner the market (until the Nixon administration intervened) and then by the economic crisis of the Carter administration.
The silver futures price then fell during the Reagan & Thatcher era 80′s economic expansion, only to rise again during the collapse of the Soviet Union and the economic problems that accompanied the late 80′s Bush 41 administration.
Silver stayed relatively stable during the Clinton years, and the balanced budget and economic growth that followed the 1994 Republican Congress led to such unprecedented strength in US Treasury Bonds that the 30 year Bond temporarily replaced precious metals as the “flight to safety” in the late 1990′s, when South Korea and Thailand were in danger of a sovereign debt default and nuclear war threatened Kashmir.
September 11 and Silver Futures Prices
Since 2001, the War on Terror has actually not impacted trading silver futures appreciably. The collapse of the mortgage bubble had a much greater effect, with a price spike commencing in 2007 and continuing through to the present. The failure of the Obama administration to implement policies to restore the economy’s health and to meaningfully address the unemployment problem has caused a ripple effect in Europe and Asia.
Speculating on Silver Industrial Application
Although both gold and silver are used for jewelry, crafts, and some industrial applications, silver has a number of properties which are uniquely in demand in the 21st century, which may give speculators some additional food for thought when weighing on how to trade silver futures.
Silver’s Electrical Conductivity Property
Silver is one of the best known conductors of electricity. Although the use of silver halides for manufacturing photographic film has fallen into decline, silver is a critical component in making flat panel LCD, LED and plasma screens. Apple alone has become a huge silver end buyer due to the demand of the iPad and iPhone. Additionally, silver is used in the production of batteries, which are a ubiquitous necessity in our portable gadget, hi-tech 21st century.
The demand for physical silver had led to numerous reports of niche recycling locations emerging that specialize in cannibalizing discarded computer screens, batteries, and other electronic devices that contain recoverable silver.
Silver Futures Prices Now
A look at a silver futures chart for Spring of 2011 shows an unusual spike in the price. Starting in February the price of silver practically doubled to a near historic high of $50. This was followed by a plummet back to the low 30′s in a matter of days. However, what the chart will not reveal is that the CME Group, which owns the NYMEX, raised margin requirements three times over an eight day period.
This action resulted in drastically curtailed trading activity, due to decreased leverage for futures contracts. Analysts of silver futures trading have since split into two camps.
Accept Importance of Silver Now
Those that do not acknowledge the new tech demands for silver having an influence on market prices still categorize silver as the “poor trader’s gold”, and have described the spike in early 2011 as a speculative bubble that saw a drastic correction due to proper action taken by the CME to “regulate” the market.
Future Silver Price Trend
The opposing view holds that the CME intervention was a manipulation, and that the lack of available physical silver, combined with inflation fears and the devaluation of the dollar from QE 1 & 2, will soon catapult silver back to $50 and beyond. Prices are currently over $40. Silver futures traders have an interesting choice ahead of them.
Study the Silver Historical Price Charts
| Standard Silver Contract | ||
| Symbol | SI | |
| Per Contract Size | 5,000 troy ounces | |
| Price Quotation | U.S. Cents per troy ounce | |
| Minimum Price Fluctuation | $0.005 per troy ounce | |
| Termination of Trading | Trading terminates on the third last business day of the delivery month. | |
| Mini Silver Contract | ||
| Symbol | QI | |
| Per Contract Size | 2,500 troy ounces | |
| Price Quotation | U.S. cents per troy ounce | |
| Minimum Price Fluctuation | $0.0125 per troy ounce | |
| Termination of Trading | Trading terminates on the third last business day of the delivery month. | |
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These are the tips on how to trade silver futures, using the silver historical price charts.
