Silver, one of the precious metals, is treasured as a form of currency and store of value. Mexico is the largest producer and Peru, the second largest. Most of the silver produced on the Earth is consumed by US, India, Canada, Mexico, UK, France, Germany, Italy and Japan.

Some of the major factors to which the silver prices follow are:

Mega Investors: When the mega investors of the commodity market like Hunt Brothers and Warren Buffet buy a lot of silver from the market and the hold it for long, silver becomes dearer to the market. Such Trends have been seen in earlier years.

Industrial Demand: Silver is used as raw material in the batteries, semiconductor, and micro-circuits industries. To increase the production, owing to the requirement of more raw materials, silver price rises. Moreover, increased use of silver jewelries by the middle class families can also shift sliver prices up.

Gold Prices: Gold is considered to be the crucial driver for silver prices. People are interested in most of the precious metals which leads to an increased investment demand for silver. Silver has a small market compared to gold; therefore prices can go higher very easily. Similarly, when the environment seems unfavorable, investors soon lose confidence in silver which brings down the prices. Thus, the trend of the gold-silver ratio shows that silver has follows the gold prices.

US Dollar: There exists an inverse relationship between silver and the USD index. Silver can only be used as a long run hedge against inflation, but it happens to be very poor in the short run as a hedging tool.

Oil Prices: If we follow history, Gold is seen to have a strong positive correlation with Oil. Similarly, from above, we know that gold and silver have also strong and stable correlation. Therefore, Silver has a strong positive correlation with Oil. Analysts also argue that oil prices and silver have greater correlation than gold and silver, as both are industrial elements and the demand influencing factors could also be common.

Stock Indices: There, certainly should be some relationship between the fortunes of the stock markets and silver prices as it appeals to be the best alternative investment when stock market is not favoring. But, the exact relationship is very hard to explain. When regression was carried out by experts across S&P 500, Dow Jones, BSE and NYSE, a common pattern budded. The relationship between silver and the stock market was low before the recession. But, during the subprime crisis and after that, silver is seen to be highly correlated with the stock markets. Silver prices rose as the stock market rose, and began a slump when the stock markets began a dip.