The market of silver (like gold) depends on both economic and political factors. Sometimes the second group of factors has a more considerable impact on the market. One of the major factors is inflation hedging.
In connection with a slowdown in the buying power silver and gold are safe heaven assets. Precious metals always maintain their value unlike currencies.
The same thing is about gold or silver versus the US dollar. When the reserve currency is under pressure investors start looking for safer assets. During the times of uncertainty silver and gold tend to gain value, which we could see during the Arab revolutions and can see now when there is uncertainty in the USA (debt ceiling issue) and the eurozone (debt crisis).
On July 27th silver made an upswing above 41.00 and then started consolidating between 40.00 и 40.60. “It seems like the markets are getting tired of bad news and are sure that the US debt ceiling issue will be successfully resolved” said the analysts for "ForexTrend" (the 9th place in the rating of FX brokers by ).
Silver is industrially attractive as well. Numerous industries consume 46% of the global supplies of silver. The consumption volume is growing, especially in solar industry.
According to the professional traders from the Department of Commodity Trading, , as the industrial and speculative (investment) demand for silver is currently growing (while there is uncertainty in the eurozone and the US), the silver/gold ratio will inevitably hit the historical record of 16/1.
