Silver Spot Price (XAG)
Current Silver Price
It’s always important to find accurate updates on the price of silver per ounce on an up-to-the-moment basis. This is because the spot price of silver is changing every few seconds as the precious metal is traded. Current silver prices are typically measured in dollars per oz. Keep in mind that the silver price per ounce is expressed in troy ounces, not standard avoirdupois (AVP) ounces that are used in almost all other situations.
Find out more about the spot price of silver below!
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How Silver Prices are Determined Today
Futures contracts for precious metals are traded on the commodities exchange (abbreviated at COMEX) in New York City. These legally binding contracts for future delivery of metal are used by producers (i.e. miners) to hedge their positions in case of falling prices. Conversely, futures are also used by speculators to capitalize upon the risk of trading. Nonetheless, in this way, trading futures is how the process of price discovery takes place and a fair market price for precious metals like silver is determined. The direction of the futures markets directly impacts the day-to-day fluctuations of the silver price.
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Precious Metal Terms
- Spot Price
- The current market price at a given time and place for a commodity. The two spot price types are the Ask and Bid price.
- Ask Price
- The minimum price that a dealer is willing to sell for one troy ounce of precious metal.
- Bid Price
- The maximum price that a dealer is willing to purchase for one troy ounce of precious metal.
- The value of a coin above its intrinsic value (value above the spot price).
- The difference between a dealer's Bid and Ask price.
- Melt Value
- The value of the metal content of a precious metal object, regardless of workmanship or rarity. The raw value of an object if it were melted down. Metal value is usually only calculated on the precious metal content of an item. For example, the melt value of a sterling silver coin only takes into account the 92.5% silver content of the coin, and ignores the 7.5% copper content.
The Nature and History of Silver Prices
When people are looking for current, up-to-date silver prices, what they seek is the silver spot price. This is the real-time price of silver at a given location. It fluctuates throughout the day as buying and selling action unfolds in the futures markets. The exchange where these futures contracts trade hands is known as the COMEX, which is administered by the CME (Chicago Mercantile Exchange) Group, which merged with the NYMEX (New York Mercantile Exchange) in 2008.
Throughout much of the history of human civilization, silver has carried the reputation as "Poor Man's Gold" because it shares many similarities to its precious metal cousin but has historically been valued at a significantly lower price than gold. This makes silver especially useful as a form of low-denomination money. This tradition goes all the way back to antiquity but is based on more than tradition, as we will explore below.
A general overview of the gold-to-silver price ratio shows that gold has typically been more than 60 times more expensive than silver over the past decade or so. However, the historical average is closer to a 30:1 ratio. In fact, during the 18th and 19th centuries, the most common ratio was between 16:1 and 15:1. Moreover, during time periods where the precious metals enter a bull market, silver generally exceeds the performance of gold in terms of price appreciation. For these reasons (among others), you will often hear pundits make compelling arguments for why silver remains considerably underpriced.
What Is the Spot Price of Silver?
The spot price of silver is the constantly changing price at which silver is traded on the global markets. Unlike futures prices, spot prices indicate the value of silver for immediate delivery. Spot prices are used by financial institutions, silver retailers, and investors to calculate the price at which varying silver products are bought and sold. Whether they are physical products (such as bars, coins, or bullion) or financial instruments (such as ETF shares), the spot price of silver is the basis for which those products are sold and traded.
This universally published spot price is an indispensable resource for all participants in the precious metals markets, from silver producers to bullion dealers to retail investors. Because it indicates the prevailing price at a given time and location, the spot price is customarily accompanied by a premium in certain regions where investment-grade silver is more scarce or in particularly high demand. For the benefit of consumers and wholesalers, every silver bullion dealer worth their salt openly lists its "bid" and "ask" spread. In other words, they publicly indicate how much they will pay for one ounce of generic silver and how much they will charge for the same. The small spread between these two prices is a large basis for how bullion dealers stay in business.
The Use of Silver as Money
Two recurring phrases that encapsulate the way silver functions in its role as money are "Poor Man's Gold" and "The Money of the People." These do a good job of capturing the reasons why silver was used as circulating currency in the U.S. (and around the world) until the middle of the 1960s. In the preceding centuries, the situation was similar. Countries always needed an ample supply of silver coins circulating to maintain a healthy level of economic activity among merchants and consumers.
Silver’s lower price relative to gold makes it more desirable for smaller transactions. Due to its high value, it would take inconveniently small amounts of gold to settle small exchanges less than $50. By contrast, silver is perfect for this purpose. This is evidenced by the historical use--both in the U.S. and elsewhere--of silver for lower denomination coins (such as dimes, quarters, half dollars, and dollar coins) and gold for the larger coins ($2.50, $5, $10, and $20 denominations).
Behind gold, silver is the second-best metal when it comes to a number of physical properties, such as conductivity. It is worth noting that silver has a wide variety of industrial uses for this reason. Unlike gold, roughly half of the annual silver supply is not used for idle financial purposes.
All the same, as a precious metal, silver meets the seven crucial requirements for an adequate form of physical money:
- utility and value: silver is a valuable commodity;
- homogeneity: as a metal, silver can be refined to a pure state where each of its constituent parts are chemically and physically identical;
- portability: silver can be transported in a convenient solid state;
- indestructibility: silver corrodes very slowly;
- divisibility: because it is homogenous, silver can easily be divided into identical portions;
- stability of value: the price of silver has proven a valuable hedge against inflation;
- cognizability: with its distinctive color and luster, silver is universally recognizable.
Interestingly, paper money does not meet many of these requirements! This is why so many people still invest in silver coins and silver bars as a way of protecting their wealth from the ravages of inflation.
Historical Silver Price
One of the most reliable indicators of the silver price over the course of history is the gold-to-silver ratio. This ratio is partially of interest because of the long-standing association between the two precious metals. In some sense, they can be considered the two "monetary metals" because of their traditional use as a medium for transferring value, both during antiquity and in more modern times. Interestingly enough, even though the most common monetary regime over the past 500 years has included both href="https://www.gainesvillecoins.com/category/2258/gold-coins">gold coins and silver coins in circulation as money, an official bimetallic standard has been relatively rare. Instead, a pure gold standard was more frequently used. The notion of whether the United States should use a gold standard or include silver was a key political battle that took place around the turn of the 20th century, particularly in the presidential election of 1896.
One of the main components of this argument over gold and silver was the fact that silver prices were very sensitive to silver mining interests in the American West during the latter half of the 19th century. The political influence of these western miners helped reintroduce the silver dollar in 1878 with what became known as the Morgan dollar for the coin’s designer, George T. Morgan. The agreement by the U.S. government to purchase millions of ounces of silver from producers in the West directly led to the minting of the Morgan dollar, which later became one of the most beloved U.S. coins in American history.
Understanding The Silver Price
What is the spot price of silver?
The spot price of silver is the constantly changing price at which silver is traded on the global markets. Unlike futures prices, spot prices indicate the value of silver for immediate delivery. Spot prices are used by financial institutions, silver retailers, and investors to calculate the price at which varying silver products are bought and sold. Whether they be physical products (such as bars, coins, or bullion) or financial instruments (such as ETF shares), the spot price of silver is the basis for which those products are sold and traded.
Silver Spot Price Frequently Asked Questions
How is the spot price of silver calculated?
The spot price of silver is determined by the aggregate level of supply and demand of available silver at any given moment. Therefore, many things can be variables that affect the current spot price including developments in the financial and commodity markets, new discoveries of silver, changes in taste for silver, geopolitical events, or economic events. Currently, it is believed that trading on the silver futures markets have the largest effect on the current spot price of silver.
How often do silver spot prices change?
The spot price of silver is a floating average that takes into consideration all factors within the global economy that can affect the supply and demand for silver. This means that the spot price is being updated on a constant basis. While the spot price of silver may remain flat at times, it is still sensitive to many economic variables, taking them into account on a constant basis.
What can cause the spot price of silver to change?
There are many variables that can affect the current spot price of silver, and can generally be broken up into demand-side variables and supply-side variables. Changes in tastes, economic events, geopolitical uncertainties are all things that can affect the the supply or demand for silver, and therefore affect its price. For example, during the financial crisis of 2008, many people decided to invest their money into silver and gold to protect their savings from the possibility of inflation; this known as safe haven demand. The result was that the spot price of silver increased dramatically in a very short period of time. Another example would be the discovery of a new deposit of silver ore; if the deposit is large enough, it could have a substantial effect on the price of silver by increasing the total supply of the metal.
What currency is the spot price of silver denominated in?
Like most commodities such as oil, corn, or sugar, the spot price for silver is denominated in U.S. dollars. Since the U.S. dollar is the world’s reserve currency, many countries use it to engage in foreign trade with other nations for the purposes of lowering transaction costs. Therefore, most commodities are denominated in U.S. dollars to help minimize those transaction costs.
What amount of silver does the spot price refer to?
The spot price of silver reflects the current price for one troy ounce of silver. All precious metals spot prices are based on a one troy ounce unit, which is equal to 31.1 grams.
Is the spot price of silver universal?
Yes, the spot price of silver is the same whether you’re in Hong Kong or New York. The spot price of silver is determined by factors within the global economy; therefore, prices are the same across the globe. Furthermore, this means that events that may be completely unrelated to you will affect the spot price of silver that you pay.
Why can’t I buy silver at the spot price?
Because the spot price of silver is the base price for which raw silver bullion is traded, it is the lowest price at which mints and dealers can obtain physical silver. This means that in order to cover the operating expenses of doing business, it is necessary for dealers and mints to add a premium, or markup. Most dealers and mints typically operate on very small profits margins, so in order to stay in business it is necessary to use a spot + premium pricing system.
Does the spot price include markups or shipping costs?
No, the spot price of silver is the price for which raw unprocessed silver is traded in the commodities markets. The spot price does not include the cost of turning silver into coins, bars, or rounds, and it does not include the cost of shipping silver after it has been processed.
Why are some silver products priced so much higher than others?
People buy silver products, such as coins, bars, and rounds, as collectible items as well as financial instruments, sometimes both. When purchasing silver for the purposes of financial investment, investors will often buy silver products that are priced as close to the spot price as possible to maximize the amount of silver they receive. However, many people will purchase collectible silver items which have a substantial collectible premium over the spot price. Items such as limited mintage bullion coins, numismatic coins, and graded coins will often have premiums that increase the price and value of the product. Oftentimes, investors will also pay additional premiums for investment silver products that have enhanced security features to prevent counterfeiting.
How are the premiums over spot calculated? Are they the same for all silver products?
No. Generally speaking, there are three main categories of pricing when it comes to silver products: low premium (which includes generic bars and rounds), standard premium (which includes name brand bars and rounds, as well as standard issue bullion coins), and numismatic premium (which includes graded coins, semi-numismatic bullion coins, and antique circulation coins). Numismatic products will oftentimes have premiums that are many times higher than the intrinsic value of the silver contained within the coin.
What are bid and ask prices?
The bid and ask prices are the prices at which a dealer is willing to buy and sell investment grade silver. The ask price refers to the lowest price at which a dealer is willing to sell a troy ounce of silver, while the bid price is the lowest price that a dealer is offering to pay for a troy ounce of silver. These prices are merely starting points, and do not reflect the price at which a dealer is willing to buy or sell an item that may have a substantial premium or numismatic value. The difference between the bid and ask price is known as the dealer spread.
What are silver future contracts?
Silver future contracts are agreements between investors and sellers to transact a certain amount of silver at a specific price at some point in the future. Futures prices reflect expectations about what the price of silver will be in the future; thus, they can have significant effect on the current price of silver.
What is the NYMEX?
NYMEX stands for the New York Mercantile Exchange. It is the principal exchange platform where futures contracts for various commodities are traded. It was purchased by the Chicago Mercantile Exchange (CME) Group in 2008.
What is the COMEX?
This is the Commodity Exchange division of the NYMEX; once a separate exchange, it merged with NYMEX in 1994 and is now also operated under the CME Group, which runs the Chicago Mercantile Exchange. Silver futures are traded on the COMEX.
What is paper silver?
Paper silver refers to shares of electronically traded funds, or ETFs, that are backed by silver. With shares of ETFs, the investor almost never physically takes possession of actual silver. Rather, a certificate is issued which states the value of a shareholder’s stake in a particular ETF. Taking delivery of shares in a silver ETF is accompanied by a number of fees and additional costs, so most investors rollover these contracts or sell them without taking physical delivery.
Do mining companies have any effect on the price of silver?
Not directly. Because mining companies have large overhead costs, if the price of silver falls too low, mining companies may elect to scale back production in order to prevent taking a loss. While miners don’t have direct say about the price at which they can charge, ceteris paribus (all things being equal), if the available supply of silver falls then it is possible for the price of silver to increase.
Is silver traded 24 hours a day?
Yes. Because silver is traded globally, there are constantly trades being made whether they be in Hong Kong, London, or New York City. This also means that fluctuations in the spot price of silver occur on a 24-hour basis.
Is physical silver taxed?
Purchases of silver bullion are subject to state sales taxes unless the product carries legal tender status. The purchase of U.S. legal tender coins, even if they contain silver, is not taxable. International purchases, however, are subject to the import duties and value added taxes (VAT) of the specific country.
What is the gold/silver ratio?
This is simply the ratio between the gold price and silver price. It is sometimes cited by investors to compare current prices with historical gold-to-silver ratios, possibly indicating if one of the two precious metals appears overvalued or undervalued relative to the other. From the time of the American Revolution to the closing of the gold window in 1971, the gold/silver ratio was typically between 1:15 and 1:16.
Why are there separate prices for bank wire and credit card transactions?
Bank wires and credit card payments differ because of the merchant fees and higher transaction costs associated with credit card payments. Dealers must cover these extra costs when customers pay by credit card, so a discount is offered for “cash equivalent” payment methods such as bank wires.
If the spot price increases just before I make my online purchase, am I going to be charged a higher amount?
Yes. The price you pay per troy ounce of silver freely fluctuates until you have locked in the spot price by formally placing your order. This is because the spot price is dynamic, changing throughout the trading day.
Does the monetary denomination of a silver coin affect its overall value?
For the purposes of spending a silver coin as legal tender, its denomination directly affects its value. This is the exact amount the coin is worth as currency for commercial transactions. Yet, insofar as silver coins are bought and traded for the intrinsic value of their underlying metal, or for their appeal as collectibles, the monetary denomination has no bearing on the coin’s real value.
Is it better to buy silver online?
There are certain advantages to buying silver online compared to hand-to-hand sales. Shopping online gives you greater selection and greater convenience, allowing you to shop from the comfort of your home or while on the go. Online shopping lets you make purchases when brick-and-mortar shops are closed for the night or the weekend, so you can lock in spot prices for your order at any given time. Most importantly, online services don’t have many of the overhead costs associated with traditional “brick and mortar” retailers, and are thus able to offer lower prices