Silver has been one of the most treasured foundations for Native American jewelry. The blending of silver with turquoise and other precious stones in artistic interpretations of Native cultural traditions is part of what makes these pieces more than simple adornment. Silver has a long history in the Southwest, bringing both boom and bust to many areas over the years. Its changing value is still linked to that boom and bust cycle today.
Silver today is part of an ongoing frenzy of activity that takes place far from the peaceful deserts of the Southwest. In commodity markets in London, Chicago, New York, Zurich and Hong Kong, silver and other precious metals are traded around the clock. Its price is set based on the time honored economic principle of supply and demand. A decline in mine production of silver can decrease the supply of the precious metal, meaning that those wishing to use it must depend on supplies already available rather than new stock coming from the mines. This influences the price users pay for their silver.
The physical trading of silver remains centered in London, but the paper contracting of silver purchases occurs mostly in New York. Using availability and demand to set price is the job of the COMEX, the Commodity Exchange division of the New York Mercantile Exchange. The current price for silver, or what is known as the “spot” price, is set by this division according to these and other factors such as inflation. The spot price can be impacted by what’s going on with paper currency, what’s happening to interest rates and what current deficits look like. Prices set by COMEX form the basis for prices set all over the world.
Operated today by its parent corporation, the CME Group of Chicago, COMEX was started in 1933 in New York. In 1994, the exchange merged with the New York Mercantile Exchange. The volume of precious metals that flow through the exchange and the fact that traders from all over the world participate in COMEX are two of the reasons behind its success. Almost half a million futures are traded each day, making it one of the busiest markets in the world.
A government agency known as the Commodity Futures Trading Commission regulates the transactions at COMEX. Since 2006, these transactions are done in electronic form rather than the previous shouting and gesturing of physical trading. With the new electronic transactions, silver’s long history as a valuable commodity is easing into the 21st century.