What was the highest silver price ever and when was it reached? Learn about the white metal’s historic and current price movement.
The spot price of silver has been relatively flat this year, with gold receiving more attention.
Since the end of 2018, gold has climbed just over 5 percent, while silver rose only 2 percent. Despite its lackluster performance, many silver-focused investors believe that a for the precious metal is possible and that prices could rise higher this year. Experts are optimistic, and as a result, some market watchers are beginning to ask themselves, “What was the highest price for silver?”
The answer to that question reveals how much potential there is for the silver price to rise Read on for a look at how the silver price chart has shifted in the past, and what that could mean for the future.
How is silver traded?
Before discovering what the highest silver price ever was, it’s worth looking at how the precious metal is traded. Knowing the mechanics behind how the metal changes hands can be useful in understanding why and how its price changes.
Put simply, silver bullion is traded in dollars and cents per ounce, with market activity taking place worldwide at all hours. Key commodities markets like New York, London and Hong Kong are just a few locations where investors trade the commodity. London is the center of physical silver trade, while the COMEX division of the New York Mercantile Exchange, or NYMEX, is where most paper trading is done.
Physical silver is sold on the spot market, meaning that in order to invest in silver this way, buyers pay a specific price for the metal and then have it delivered immediately. Two popular ways to invest in silver bullion are through purchasing silver coins or silver bars.
Paper trading is done via the futures market, with participants entering into futures contracts for the delivery of silver in the future at an agreed upon price. In such contracts, two positions can be taken: a long position to accept delivery of the metal or a short position to provide delivery of the metal.
Paper trading might sound like a strange route to take when one wants to invest in silver, but it can provide investors with flexibility that they wouldn’t get from buying and selling physical silver. The most obvious advantage is perhaps the fact that trading in the paper markets means market participants can benefit long term from holding silver without needing to store it. Furthermore, futures trading can offer more financial leverage in that it requires less capital than trading in the physical market.
Historical silver price action
Silver hit US$48.70 per ounce, the highest silver price ever, towards the end of the 1970s. However, it didn’t exactly reach that level by honest means.
As Investopedia explains, the metal’s rise was driven by the Hunt brothers, two wealthy traders who attempted to corner the market by buying not only physical silver, but also silver futures. They then took delivery of that silver instead of taking cash settlements. Their exploits ultimately ended in disaster: On March 27, 1980, they missed a margin call and the silver price plunged to US$11 per ounce.
Despite that price action, silver’s highest average annual price didn’t come until 2011, when it hit US$35.12 per ounce. The commodity price uptick came on the back of very strong silver investment demand, and was more than double the 2009 average silver price of US$14.67 per ounce. 2011 was also the year that silver hit its highest price in recent years.
The below chart from Kitco spans from the start of January 2011 to May 2019. It shows that the silver price reached US$47.94 per ounce in April 2011 before plummeting in the years that followed.
Chart via Kitco.
Like other commodities, the is most heavily influenced by supply and demand dynamics. However, as the stats above illustrate, the silver price can be very volatile. That is partially due to the fact that the metal is subject to both investment and industrial demand within the global markets.
In other words, it’s bought by investors interested in using it as a store of wealth as well as by manufacturers looking to use it for different applications. Those applications are incredibly varied — silver has diverse technological applications and is used in devices like batteries and catalysts, but it’s also used in medicine and in the automotive industry.
Looking at supply, in 2017, the world’s three top producers of the metal were Mexico, Peru and China. Interestingly, even in those countries the white metal is usually produced as a by-product — for instance, a mine producing primarily gold might also have silver output.
Beware silver price manipulation
As a final note on the silver price, it’s important for investors to be aware that price manipulation is a major issue in the space. In 2015, 10 banks were hit in a US probe on precious metals manipulation. Evidence provided by Deutsche Bank (NYSE:DB) showed “smoking gun” proof that UBS Group (NYSE:UBS), HSBC Holdings (NYSE:HSBC), the Bank of Nova Scotia (NYSE:BNS) and other firms were involved in rigging silver rates in the market from 2007 to 2013.
JPMorgan Chase (NYSE:JPM) has been long at the center of silver manipulation claims as well. For several years the company has been in and out of court for the accusations. In early 2017, a US appeals court revived a lawsuit against JPMorgan.
While that might sound disheartening, in 2014 the London Silver Market Fixing stopped administering the London silver fix, which had been used for over a century to fix the price of silver. It was replaced by the LBMA Silver Price, which is run by the LBMA, CME Group (NASDAQ:CME) and Thomson Reuters (TSX:TRI,NYSE:TRI), in a bid to increase market transparency. Furthermore, many analysts like Ed Steer have said that the days of silver manipulation are numbered, and that the market will see a significant shift when the time finally comes.
While there’s a concrete answer to the question, “What was the highest price for silver?” it’s anyone’s guess whether it will reach those heights once again. Despite the current price of the white metal, many market watchers say that now is the time to buy silver. No matter the current state of the metal, investors will no doubt be watching to see how the metal fares for 2019 and beyond.
This is an updated version of an article first published by the Investing News Network in 2015.
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Securities Disclosure: I, Nicole Rashotte, currently hold no direct investment interest in any company mentioned in this article.