# Silver

> Silver is both a precious and an industrial metal, which makes it more volatile than gold. Learn silver futures, the gold silver ratio and famous squeezes.

Source: https://learn.tradelabsai.com/commodities/silver/  
Track: Commodities · Level: Intermediate · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Silver", https://learn.tradelabsai.com/commodities/silver/

Silver sits between two worlds. Like gold, it is a precious metal held as an investment and a store of value. Unlike gold, more than half of its demand comes from industry: electronics, solar panels, electrical contacts and other uses. This dual role means silver responds to both financial conditions and economic growth, and it typically moves more sharply than gold in both directions. Silver's smaller market size has also made it prone to dramatic squeezes.

## How silver is traded

| Instrument | Details |
|---|---|
| COMEX silver futures (SI) | 5,000 troy ounces; $0.005 tick = $25 |
| Micro silver futures (SIL) | 1,000 troy ounces |
| London OTC market | LBMA silver price set daily |
| Physically backed ETFs | Hold silver in vaults |
| Coins and bars | Physical ownership with premiums |
| Silver mining stocks | Leveraged to the silver price |

## Supply and demand

According to the Silver Institute, total silver demand is roughly 1.1 to 1.2 billion ounces a year. Industrial uses make up about half or more, with photovoltaic (solar panel) demand growing rapidly in recent years. Most silver is produced as a by product of mining for lead, zinc, copper and gold, so supply does not respond quickly to silver prices. The market has run deficits in recent years, drawing down above ground stocks.

## What drives silver prices

| Driver | Effect |
|---|---|
| Gold and real interest rates | Silver often follows gold's direction. See [Gold](https://learn.tradelabsai.com/commodities/gold/) |
| US dollar | A weaker dollar tends to support silver |
| Industrial demand | Growth in electronics and solar raises demand |
| Economic cycle | Recessions hurt industrial demand |
| Investment flows | ETF buying and retail demand amplify moves |
| Mine supply | By product supply depends on other metals' output |

## The gold silver ratio

```
gold silver ratio = gold price per ounce / silver price per ounce
```

**Example: Trading the ratio**
Gold is $2,400 and silver is $28, so the ratio is about 86. A trader who believes silver is cheap relative to gold buys silver and sells gold in equal dollar amounts. If gold rises to $2,500 and silver to $32, the ratio falls to about 78. On $100,000 per leg, the silver leg gains about $14,286 (a 14.3% rise) and the gold leg loses about $4,167 (4.2%), for a net gain of about $10,100. The trade profits from silver outperforming gold, regardless of overall direction. See [Futures Spreads Explained](https://learn.tradelabsai.com/futures/futures-spreads-explained/).

The ratio has ranged from below 40 (1980 and 2011 peaks) to above 120 (March 2020).

## Volatility

Silver's daily volatility has often been one and a half to two times that of gold. Smaller market size and industrial sensitivity mean big rallies and big crashes. In 2011, silver nearly hit $50 an ounce in April before falling by roughly a third within weeks after exchanges raised margin requirements.

## Famous squeezes

- **The Hunt brothers (1979 to 1980):** Nelson Bunker Hunt and William Herbert Hunt accumulated vast silver holdings, driving prices from about $6 to nearly $50 an ounce. After COMEX restricted leveraged buying, prices collapsed on "Silver Thursday", 27 March 1980. See [Market Manipulation](https://learn.tradelabsai.com/industry/market-manipulation/).
- **January and February 2021:** online retail investors briefly targeted silver after the GameStop episode, pushing prices up sharply for a few days before they faded.

## How traders approach silver

- **Macro and gold linked trading,** with extra volatility.
- **Ratio trading** against gold.
- **Industrial cycle trading** with copper and other base metals. See [Copper](https://learn.tradelabsai.com/commodities/copper/).
- **Trend following,** with smaller position sizes because of volatility. See [Volatility and ATR-Based Sizing](https://learn.tradelabsai.com/risk/volatility-and-atr-based-sizing/).

## Risks

- **High volatility** and sharp reversals.
- **Margin increases** during spikes, forcing leveraged traders out.
- **Physical premiums** can rise sharply in shortages.
- **Industrial demand shocks** in recessions.

## Frequently asked questions

### Why is silver more volatile than gold?

Its market is smaller, it has large industrial demand tied to the economic cycle, and investment flows can move prices more easily.

### What is the gold silver ratio?

The number of ounces of silver needed to buy one ounce of gold, used to compare their relative value.

### What is silver used for?

Electronics, solar panels, electrical contacts, brazing, medical uses, jewellery, silverware, coins and bars.

Next, learn about the industrial metal that tracks the economy in [Copper](https://learn.tradelabsai.com/commodities/copper/).

## Sources

- The Silver Institute, [World Silver Survey](https://www.silverinstitute.org/)

## Continue learning

- Next lesson: [Copper](https://learn.tradelabsai.com/commodities/copper/)
- Previous lesson: [Gold](https://learn.tradelabsai.com/commodities/gold/)
- Related: [Gold](https://learn.tradelabsai.com/commodities/gold/): Gold is a safe haven and inflation hedge driven by real rates, the dollar and central banks. Learn gold futures, ETFs, key drivers and how traders approach gold.
- Related: [Metals Markets](https://learn.tradelabsai.com/commodities/metals-markets/): Metals markets include precious metals like gold and silver and industrial metals like copper and aluminium. Learn the exchanges, drivers and how metals are traded.
- Related: [Copper](https://learn.tradelabsai.com/commodities/copper/): Copper prices track global industry, China and the energy transition. Learn copper futures on COMEX and LME, supply and demand, inventories and key drivers.
- Related: [Futures Spreads Explained](https://learn.tradelabsai.com/futures/futures-spreads-explained/): Futures spreads buy one contract and sell a related one. Learn calendar, inter market and inter commodity spreads, margin benefits, quoting and worked examples.
- Related: [Market Manipulation](https://learn.tradelabsai.com/industry/market-manipulation/): Market manipulation means artificially moving prices or volume to mislead others. Learn the main types, from pump and dumps to spoofing, and real cases.