What causes the volatility in Gold and Silver Prices?

You open your browser, and check the gold prices and see gold is down 5% from last week.  You wonder WHY?  Gold and Silver prices are influenced by many factors.  Both are used in industry and the prices are impacted by manufacture’s purchasing of gold or silver as raw materials in their products. For instance, circuit boards are printed with gold and silver leads.  If we are in a technology boom, you would expect gold and silver prices to move higher.  If demand lowers, you would expect the opposite.

That being said, a bigger driver of prices seems to be the “fear trade”.  The “fear trade” is determined when investors fear pretty much the worst case of everything.  They may fear, a decline in stock prices, causing the governments around the world to adopt looser policy and print more money.  Printing more money would usually indicate the devaluing of the current money supply, thus causing investors to move into gold or silver to protect the value of their current assets.

Bottom line is gold and silver prices are influenced by many factors, but one point holds true, and that is gold and silver have been used as money since before there was printed currency.

 

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