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A to Z Academy / Commodity

Silver XAGUSD: Price Chart, Forecast and How to Invest

December 01, 2021 15:13 PM

Silver is one of the most valuable precious metals and commodities traded on the markets. It has many industrial uses, which increase the demand for this metal while its supply has remained relatively stable during the last couple of years. This, along with economic uncertainty and changes in essential factors, resulted in upward movement in silver price in previous years. This guide will go into detail about this precious metal, and all you need to know if you want to trade silver today. 

What is Silver? XAGUSD Overview  

Silver is a soft white, lustrous metal with high economic value and many properties that make it suitable for different uses. The chemical metal code for silver is "Ag".  Some of the leading silver producing countries are Mexico, Peru, China, Chile, Australia, Russia, and the United States. During the last couple of years, the global mine production of the precious metal has been around 25,000 metric tonnes per year, but the quantity may fluctuate from one year to the next. 

The chemical properties of silver mean that it has many uses, and it is an important precious metal for different industries. It is commonly used in jewellery making and manufacturing ornaments and silverware. Silver has the highest electrical and heat conductivity, and it is extensively used in the fabrication of electrical circuits. Furthermore, this precious metal is used in the dental industry, production of mirrors, photography and high-capacity silver-zinc batteries.

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Silver Price History and Price Today 

The price of silver is commonly expressed in relation to the US dollar. The XAG/USD currency pair shows how much is one troy ounce of silver worth in US dollars. In this currency pair, XAG represents the base currency, while USD is the quoted currency. Historical price movements show that this metal experiences similar movements when relevant factors change. Silver has registered major price surges and reversals in its past movements. 

XAGUSD Historical Price

In the last couple of decades, XAGUSD price fluctuations formed multi-year long bull and bear trends while it also recorded a long-term sideways movement within a broad range. The longest sideways movements were recorded from around 1987 until 2005 when the silver price fluctuated from $3.5 to $7 per troy ounce. 

We note two major peaks in the silver price history. The second highest price was reached in January 1980 when silver value fluctuated up to $48 per troy ounce. The All-Time-High price of $49.8 was hit in April 2011 with the highest closing price of nearly $48. As for the lowest price, it was registered in February 1993, at $3.5 per ounce. 

The price went through the biggest depreciation in a single month in March 1980 when its price moved from $36 to $11, which is a loss of more than 60%. Its biggest price increase in a single month occurred in April 1987 when silver fluctuated from $6.2 to $10.2 and closed at $7.8. 

Silver Price Today 

Today the XAGUSD rate repeats its past movements by forming trendy movements or moving sideways. There might be a slight difference in terms of the length of each movement, and today these movements may be shorter. The price of silver today may have occasional daily fluctuations of around 10%. 

What Affects the Price of Silver?  

The price of silver may be under significant influence from many factors related specifically to silver or general economic trends. Some important factors that influence silver price are: 

  • The supply and availability of silver  
  • Worldwide demand both by consumers and industries 
  • Changes in China's demography, because it is one of the world largest silver consumers 
  • Alternatives that might replace silver in the production process of different  
  • Political and economic uncertainties in leading production countries or countries with high demand for silver 
  • Economic trends and movements in individual economies as well as the global economy 
  • Silver price generally fluctuates in inverse relationship with interest rates and the value of the USD. It also tends to move in the opposite direction of movements in stocks and bonds markets. 
  • Also note that silver is perceived to be a great hedge option against inflation.  

Silver Price Chart 

The XAGUSD chart shows that initially, silver moved sideways until 2003/04 when it started to form a bullish trend.  

The silver price chart indicates that this commodity has been through three major bull runs since 2000. The uptrend that started near the end of 2008 resulted in an appreciation in the silver price of close to 400% until the first half of 2011. The daily silver chart shows that price tends to have short-lasting downward movements with longer movements in a bullish direction. 

In the last decade, silver started its multi-year decline shortly after hitting its highest price in 2011, and the bear movement lasted until the end of 2015 and early 2016, when it registered a price reversal. In July 2020, the XAGUSD price experienced an appreciation of more than 30% in a single month, after which it went through a couple of price swings. 

Why Invest in XAG/USD Today? Points to Consider 

There are numerous aspects that make silver a good investment instrument, and some reasons that promote silver trading are: 

  • Like gold, silver is also perceived as a safe haven in times of economic turmoil 
  • It is a solid alternative to stocks and bonds during increased volatility in the equity markets 
  • Although silver price generally follows movements in gold value, it has higher volatility and might offer higher profit potential 
  • Silver can offer protection against inflation, and it gives investors a long-term value 
  • Its industrial application makes the value of silver prone to manufacturing cycles and increases its volatility 
  • Silver is often referred to as the cheap alternative to gold but with higher profit potential due to the wider fluctuations 
  • It can be a nice addition to an investment portfolio as a diversification asset and counterbalance against equities 
  • It is estimated that silver outperforms gold during bull markets 
  • Historically, it has generated higher returns compared to gold 

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Silver Instruments and Ways to Invest   

Investing in silver today can be done through some of the multiple instruments developed on the financial markets, as detailed below. 

Buy Silver Stocks 

Silver stocks are related to companies that engage in mining operations or resellers companies, also referred to as streaming companies. There are two major drawbacks when it comes to this investment option. First, the number of companies that can be labelled as pure silver companies is low. Next, silver stocks are influenced by additional factors associated with how the company operates, efficiency, management, etc. 

Buy Silver ETF 

Investors who don't mind paying higher investment costs and management fees may want to consider investing in a silver ETF. ETFs are funds that are traded in the equity market in the same way as stocks, and these funds invest in silver or assiciated stocks. Before investing in an ETF, investors should find the most suitable fund that is adequate for their needs, and this might be a time-consuming task. 

Buy Silver Options 

Silver options are a derivative instrument whose value is associated with silver as an underlying asset. Options can give the right to buy or sell gold with defined execution conditions, for which the investor will pay a premium. The premium represents the cost or the price of the option, and it is non-refundable. Another negative aspect of options is their potential complexity. You will need to understand how options function, which is why more advanced investors generally use them. 

Buy Physical Silver 

Buying silver in its physical form is a viable investment for investors with a secure place to store it. Holding a silver bar is not very liquid, especially if you need quick access to your funds. To cash in your investment, you need to find a party that will buy physical silver, and they might pay a lower price. You’ll also need to consider  the markup placed by sellers, to offset their operating costs.  

Buy Silver Futures

Silver futures are exchange-traded contracts that impose an obligation for the contract buyer to take delivery from the seller following the contract terms. The downside of futures is that the contract value may be large, a mini account is set at 1,000 troy ounces, the obligation that comes with the contracts and a certain level of complexity. 

Buy Silver CFDs 

Contracts for differences or CFDs represent a purchase or sell order for a specified amount of underlying asset. The profit or loss on the CFD is estimated based on the entry price and the closing price. CFDs are perceived as superior to other instruments because they offer high leverage, which is beneficial for enhancing trading gains with the same level of trading capital. Note that you can trade CFDs with a broker like ZFX, as detailed below. 

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Where Can I Trade Silver?  

Out of the basic available options for trading silver, CFDs offered by ZFX could be pointed out as the most viable option based on its trading features. In addition, the ZFX broker positioned itself as an optimal broker for trading silver because it offers optimal trading terms and conditions. 

Investors have access to the most relevant factors through the ZFX portal, where an economic calendar, market news and market outlook are provided. Newbie traders have access to many educational resources and a demo account to gain trading experience.  

Apart from this asset, ZFX enables traders to profit from movements in the price of other assets like stocks, indices and forex pairs. ZFX makes silver trading online intuitive and swift, especially since the MT4 platform offers plenty of trading tools for developing personal strategies.  

How to Start Investing in XAGUSD Now 

Before trading, you need to complete a few simple steps to open a trading account with a ZFX broker. The steps are explained next. 

 1. Register with ZFX  

Traders can open an account by visiting the ZFX website and selecting any of the available options. You can directly select the "Open an Account" button, and fill out the form which will appear. 

Trade Walmart - Step 1

You can then click on “Next”, to finalise the registration process. ZFX will then display a link to download MT4, which you will need to install on your device. Also take note of your username and password displayed on this same page. 

MT4 Login to trade silver XAGUSD

2. Account verification  

As part of the account verification process, ZFX will ask you to upload a scanned copy of your national ID, driver's license or passport. ZFX will additionally request that you verify your bank account by providing a copy of your bank statement or copy from your page book.

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3. Make your first deposit  

You can then start depositing funds online, in the "Deposit" section. Once there, they will select the funding method and provide the needed information. You can choose to fund your account via credit card or via Bank Transfer. 

trade Facebook stock with ZFX - Step 3

4. Invest in XAGUSD 

In this step, you need to download the ZFX MT4 platform on your preferred device, and you can then invest in the precious metal.

When you download the desired MT4 platform, you can now log in. Select the ZFX live server for trading with real funds. The XAGUSD pair is available in the upper left section. Double clicking the pair will open a graph with silver spot price and more details. Specify the quantity (volume), type of order, and if you wish, you can set take profit or stop-loss orders. Now you can buy XAGUSD CFD.

Things to Know Before Trading Silver 

Investors should consider some general aspects before buying silver: 

  • Follow news and announcements that might indicate changes in the production levels or demand for silver 
  • The perception of changes in supply or demand will have an uneven and often disproportionate effect on price 
  • Follow the economic calendar where key economic indicators are published 
  • Understand the market movements and movements in key economic indicators 
  • Monitor potential developments of alternatives for silver used in industrial production 
  • Keep track of changes in the equity markets; 
  • Understand the silver trading hours and decide whether you want to trade during regular trading hours of after hours trading is more suitable 
  • Silver trading hours are Sunday 18:01 - Friday 16:55 Open, Trading Days 16:55 - 18:01 Closed (New York time) 
  • The silver trading price trends make it an adequate commodity applicable to different types of trading and investment strategies

XAGUSD Forecast and Prediction  

Silver trading price is under the influence of different factors. Consequently, the silver forecast may come with a higher level of uncertainty when it comes to the possible price level that could be reached in the upcoming period. However, there is consensus among experts and analysts that XAGUSD prices might experience bullish movement in the future.

XAGUSD prediction indicates that silver could appreciate to around $40 per ounce in short to intermediate runs. Nevertheless, some analysts forecast a potential XAGUSD rate of around $31 per ounce by 2025. A potential price of slightly more than $28 is also quoted for the near future, whereas the pessimistic prediction points toward a low price of $23.

 The bullish forecasts primarily come from the expected economic uncertainty in the next period, along with anticipation for an increase in demand for silver. Technical indicators support the bullish forecasts, and when analysing different time frames, they provide a "strong-buy" signal.

Bottom Line: Is Silver a Good Investment Now? 

A variety of technical and fundamental factors support silver as a good investment asset in today’s economy. Going through the most popular indicators, patterns in its past movements indicate that there will be a bullish trend in the future.

Silver is a good investment because it provides diversification and can counterbalance an investment portfolio when equity market stability is questionable. Besides, the way in which XAGUSD price fluctuates makes it suitable for different trading and investment strategies. If you feel ready to trade it now, you can do so with ZFX, following the steps outlines above.

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