To better understand precious metals prices, we can look to the two most popular precious metals, gold and silver.
Many economic factors have always gone into effect to determine the value of gold. Since gold tends to be a hedge against the decline of the U.S. dollar, then decreases in the dollar could lead to higher prices of gold. Uncertainty in the market such as interest rates, stock prices and political uncertainties can all lead to changes in the price of gold.
Arguably, silver has one of the freest market value mechanisms of all assets in the world. As such, economic factors are one of the key factors in determining the price of silver. One of the main contributors to its price is the decline of the U.S. dollar, similar to how gold is priced. Decreases in the value of one’s currency may lead to higher prices of commodities, including silver, and greater appreciation for its value as “true, honest” money. Also, uncertainty in the financial markets such as interest rates, stock prices and geopolitical uncertainties generally lead to greater demand for silver and a greater appreciation in the price of silver.
This brief overview of metals prices is only the beginning. To have a more in depth conversation about pricing for gold and silver, give Monex a call and talk more with an Account Representative.