relation between supply and demand

The relationship between supply and demand is the fundamental factor affecting silver price. Usually, supply exceeds demand and the price drops; Supply falls short of demand and prices rise. Price fluctuations in turn will affect supply and demand, that is, when prices rise, supply will increase and demand will decrease; On the contrary, demand rises and supply decreases. The discovery and exploitation of new mineral deposits, the application of new technologies, the overhaul and strike of production enterprises, import and export policies, etc. will affect the output and supply; The development trend of silver application field and the change of silver investment preference will affect the demand for silver.  

Import and export policy

The import and export policy is an important aspect that affects the relationship between supply and demand. For example, China reduced the export tax rebate rate of silver and its related products from 13% to 5% from July 1, 2007, and further cancelled the 5% export tax rebate of silver from August 1, 2008, which directly affected the export volume of silver, and further affected the supply and price of domestic and foreign markets.

International and domestic political and economic situation

Silver is an important industrial raw material and can also be used as a safe haven asset. Its demand is closely related to the economic and political situation. When the economy grows, the demand for silver increases, which drives the silver price to rise; When the economy is depressed, silver demand shrinks and silver prices fall. In recent years, in response to the financial crisis, countries have introduced loose monetary policies and active fiscal policies, injecting huge liquidity into the market. As one of the assets against inflation, silver prices continue to rise driven by investment demand.  

The current sovereign debt crisis in the euro area has not been effectively resolved, and emerging economies are generally facing relatively high [Weibo] The inflationary pressure, the nuclear leakage accident caused by the Japanese earthquake and tsunami, and the turmoil in West Asia and North Africa have added a lot of uncertainties to the global economy. These variables will have a direct or indirect impact on silver prices.

Exchange rate of major world currencies and gold Price trend

In the world, silver transactions are generally denominated in US dollars, and currently several major currencies are subject to the floating exchange rate system. According to experience, changes in the exchange rate of the US dollar against major currencies will lead to some short-term fluctuations in silver prices, but will not change the general trend of the silver market.  

Both silver and gold have been used as money in history, and they have similar financial attributes. Therefore, silver prices and gold prices are positively correlated to a certain extent, but this is only consistent in the long-term trend. In the short term, the positive correlation between silver price and gold price is not very prominent. Generally, silver price fluctuates more violently than gold price.  

Fund investment direction

With the substantial increase of the fund's participation in commodity futures trading, the fund has played an important role in the fluctuation of silver price. Funds have the advantages of information and technology, so they are prescient and forward-looking to a certain extent. In recent years, the size of the Exchange Traded Fund has expanded rapidly and its position is high. The trading direction of the fund and other funds has become one of the factors affecting the fluctuation of silver price. Analysis of the changes in the net positions of funds is helpful to judge the trend of silver price.