Silver Market Trend Report, Factors that Determine the Silver Price by Silver institute said, over the last two decades, the daily silver price (basis the London fix) has risen from a low of $5.50 in 2004 to a high of $48.70 in 2011 before sliding to a bear market through five years later of $13.58. Since then, with the exception of a brief Covid-related spike downwards, silver has tended to recover strongly over the last three years, with several rallies driving the price into the upper $20s.
This Market Trend Report seeks to identify and explain the factors behind the rise and fall in the silver price over recent decades. First, it assesses silver’s supply/ demand fundamentals to ascertain to what extent changes in these may have affected the price. Second, it looks at various exogenous factors that could have been responsible for movements in the silver price.
An analysis of the historical data and contemporary reports of what market participants and observers believed was at the time driving prices leads to some key conclusions on silver price determination.
This Report concludes that there is no magic formula or combination of factors that consistently and accurately explains either the level of or change in the silver price. While the silver price is not a random walk neither is its future path entirely predictable based on past trends.
This observation particularly applies to exogenous factors, some of which might be thought to have a stable and entirely predictable impact on the price of silver. In practice, while one or a combination of these exogenous factors, such as exchange rates or interest rates, may for a period be a dominant driver, even in the short run there will be times when they are not and another price-driver (even if temporarily) takes center stage.
However, it would be misleading to conclude from the above that it is impossible to identify and sort by degree of importance those relationships that will most likely have the strongest influence on the price of silver. And, while one should not confuse correlation with causality, the statistical data points out clearly those factors that have proved to be the most relevant for silver prices over the long run.
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