New precious metals investors often get confused by the fluctuating silver price per ounce. Silver is a commodity that is consumed for a variety of purposes beyond investment. Silver is used in jewelry making, electronics manufacturing, medical industry and others in addition to silver bullion.
Many of the industries that consume silver prefer to buy the silver they are going to use before it is mined. By prepurchasing their silver they are locking in the best possible price in order to stabilize prouduct costs. This also helps the silver miners to better understand what the market price for their product will be once it is mined.
What is COMEX silver trading?
The process of buying and selling silver as a commodity before it is mined is done by trading futures contracts. Futures contracts represent the delivery of mined silver bullion sometime in the future based on the delivery terms of the contract.
Futures contracts for precious metals commodities like silver are traded on the global Commodities Exchange (COMEX).
Silver futures or paper contracts are traded by commodities brokers around the globe 24 hours per day. As the paper contracts for the future delivery of physical silver bullion is traded the silver spot price fluctuates.
Silver Spot Price Per Ounce
Silver spot price is determined by the trading of silver futures contracts on COMEX. The spot price of silver has absolutely nothing to do with the actual supply and demand for physical silver bullion. The silver spot price is derived based on the
supply and demand of the silver futures contracts.
The spot price of physical silver bullion is set by the trading of futures contracts. This has led many to believe that the price of physical silver bullion is being manipulated by large banks and commodities traders.
Many believe that there exists a conspiracy to keep the spot price of silver artificially low so that banks and other wealthy individuals and organizations can accumulate and physical silver bullion before the next major global economic crisis.
