Generally speaking, the price of silver changes greatly, and these factors mainly affect its change.

I. Influencing factors of supply and demand

Supply and demand determine the price, and the supply and demand factor of silver is undoubtedly one of the important influencing factors of silver. Supply factors mainly include minerals, production technology, production costs, etc., which are often difficult to change greatly, while demand factors are closely related to economic fluctuations. For the part about minerals, please refer to our report "The Third Research Report of CSI Research on Silver Futures Series: In-depth Analysis of Silver Industry Chain". This report only expounds the influence of demand and cost on the price of silver.

1. 1 Influence of demand on silver price

Because silver is an industrial commodity, the industrial demand of silver accounts for 30-40% of the total demand, which is higher than that of gold in both international and domestic markets. Therefore, economic fluctuations are often accompanied by fluctuations in silver demand.

Industrial demand is also greatly affected by the economy. In 2009, the economic downturn after the financial crisis led to a sharp drop in industrial demand in that year to 10440 tons, which was only higher than that in 2002 in recent years. Therefore, economic fluctuations, especially changes in the electronics industry, and the impact on demand are undoubtedly important factors affecting the price of silver.

1.2 cost coefficient

The cost factor has certain influence on silver, but compared with other factors, the cost has little influence on the price of silver. At present, silver is mainly extracted from anode slime smelted by copper and lead associated ores, and most of the raw material costs have been included in the calculation of copper and lead. In large copper and lead smelting enterprises, silver is produced as an auxiliary material, and the cost is generally low. Although the domestic production cost (mainly labor cost) of silver has been greatly increased in recent two years, there is still a large profit margin. Therefore, the cost has little effect on the output and price of silver.

Second, the influencing factors of inflation

In addition to about 40% supply and demand factors, similar to the price of gold, inflation is an important factor affecting the price of silver. In order to observe the influence of this factor, we analyze the relationship between real interest rate and silver price from two aspects: price comparison after deducting inflation and different silver price cycles.

2. 1 Price comparison of silver after deducting inflation.

We take the CPI of the United States 1976 as the base period, so this year's price index is four times that of 1 1976, and the price of silver has increased from $4.30 per ounce of 1976 to $3 1 ounce, an increase of 7.8 times. After deducting the price factor, the price of silver has reached a record high in the past 30 years. We can see that the current price of silver is only about 1.983, which is far from the highest level of $48.7 per ounce, compared with the continuous upward trend of 1.979- 1.980. Looking at the typical stagflation in the United States in the 1970s, silver also increased by 1.367.4%. It can be seen that inflationary pressure is the leading factor pushing up the price of silver.

2.2 Relationship between real interest rate and silver price

In order to further illustrate the impact of inflation on the price of silver, we use this idea to analyze. We divide the price of silver since 1974 into 12 cycles (starting from 1974 1.4). On the one hand, limited by data, on the other hand, the fluctuation range of silver price was relatively small before, so the starting point was relatively reasonable. Then take the highest point as the rising market; Then take the highest and lowest points as falling prices. This can filter out some small fluctuations in the middle and divide them on the daily line. In the 12 cycles of silver price fluctuation, we can see that the real interest rate is greater than zero in only two cycles, and the silver price is still rising, from June 29th 1982 to August 23rd 1986,165438+1October 26th respectively. The period from 1982 to 1983 was mainly due to the high inflation level in the United States, and the strong inflation function of silver pushed the price of silver up. From 1986,165438+126 October to 65438+0987 April 27, on the one hand, after the continuous weak decline of silver, there is a strong demand for rebound. On the other hand, the economic recovery after the financial crisis in 1980s increased the industrial demand for silver. In addition, we also notice that the real interest rate is negative, and the silver price still falls for two periods, which are March 18 to June 17, 2011in 2008. In 2008, mainly because of the financial crisis, risky assets were abandoned. In order to protect assets, people hold cash in succession, which causes the price of silver to fall. However, from May to September, 20111experienced a continuous sharp rise from February to April. Historical experience shows that if negative interest rates are maintained, the probability of silver prices going up is still too high.