5 Factors That Affect Gold And Silver Price Fluctuations

More and more investors are shifting from traditional investment options to precious metal investments such as gold and silver. The increasingly high demand for precious metal investments is mainly because gold and silver are liquid investments and are excellent stores of value. However, even though these precious metals have improved steadily in value over the years, prospective investors need to take time to understand all the factors that affect these investments such as the constant price fluctuations.

charts of gold and silver prices

By identifying the factors that cause silver and gold price fluctuations, investors can take the necessary measures to ensure that they maximize their investment gains and minimize losses. Overall, the main factors that cause the incessant rise and fall of silver prices in the US include:

Value of the Dollar

As is the case with other precious metals, the prices of gold and silver depend, largely, on the current value of the dollar. When the US Dollar Index decreases, the prices of precious metals rise. This is because; when the value of the dollar is low, it takes more dollars to buy unchanging volumes of silver or gold since, unlike paper money, physical precious metal investments do not decrease in value. Additionally, because gold and silver are a popular safe haven for investors when the dollar decreases in value, the increased demand for these investments when the value of the dollar decreases also affects prices.

Interest Rates

Traditional/conventional investment options such as stocks, shares and bonds are great assets to hold when interest rates are high. However, interest rates are prone to regular dips. When interest rates dip, the investors who own assets such as stocks, shares and bonds do not get good returns. Most of these investors turn to precious metal investments such as gold and silver since these precious metals continue to appreciate even when interest rates are low. The rise in demand for silver and gold generally causes significant price fluctuations. Conversely, when interest rates rise, investors tend to keep money on deposit instead of investing in gold and silver since precious metals are non interest-bearing investments. This causes sudden dips in the price of silver and gold.

gold and silver arrows

Anticipation of Inflation

In an inflammatory market, equity-based investment portfolios face the risk of severe devaluation. When there is expectation of inflation in the market, the demand for investment options that are great stores of value such as gold and silver tends to increase and this affects prices. This is because; investors know that they can maintain their purchasing power and insulate themselves against major losses if they use gold and silver as hedges against inflation.

Profit-Taking Trends

Admittedly, most investors perceive gold and silver investments as security assets that they can add to their equity-based investment portfolio in order to guard against factors such as inflation and devaluation of the dollar. However, in the recent past, more investors are investing in silver and gold purely for the profit-making potential of these precious metals. Such investors study the prices of gold and silver on a per minute basis daily and move large amounts of funds to either buy or sell depending on the state of the market. In order to maximize their gains, investors who invest in gold and silver solely for profit-taking purposes liquidate their physical gold and silver frequently once they make a profit or if the price of these investments drops suddenly and move to other markets. The mass liquidation of gold and silver by profit-taking investors cause prices to fluctuate sharply from one trading day to another.

bars of gold and silver

State of the Global Precious Metal Market

Before investing in gold and silver, it is important for prospective investors to be aware of the fact that the physical silver and gold markets are global. This means that the silver and gold price fluctuations do not revolve only around factors in the US economy such as inflation or currency devaluation. Investors should keep a keen watch on the global precious metal markets since factors such as hoarding of physical gold and silver in markets such as China, India and Europe due to speculation by investors around the globe have a direct impact on gold and silver prices in the US. Additionally, factors such as global economic recessions also affect precious metal prices because recessions lower jewelry consumption among consumers. As the global demand for jewelry decreases, the price of gold and silver also decreases.

It is also wise to consider rolling over your individual retirement account into a silver or a gold ira. Just investing a small portion of your retirement into a gold ira, you can hedge against economic failure.


All in all, the prices of silver and gold have been very volatile historically. In order to make good buying and selling decisions, investors who own gold and silver investments need to familiarize themselves with all the factors that influence retail and wholesale prices of these precious metals. By understanding these factors, investors can make profitable investment decisions.

Keep up to the minute on the latest gold price by using a live gold chart.

Tips On Investing In Precious Metals

Given the fact that United States debt is higher than it has ever been and that many European countries are starting to experience severe financial hardship, many people are realizing that traditional investments such as stocks, bonds, mutual funds and the like are not as valuable as they once were. This is why numerous investors are turning to precious metals such as gold, silver, palladium and platinum. These metals are some of the safest investments that one could make, as their value only rises when economic problems are rife.

At the same time, investing in the precious metal market is not something that should be done on a whim. A person will need to learn where, when and what form of metal to buy. Following is some general information that will help an investor make wise decisions.

When to Invest

Now is a good time to invest in both silver and gold, as prices are reasonably low but are set to rise in the future. In fact, over the last few months a record number of people have started investing in silver, due in large part to the fact that this metal is very affordable and therefore a realistic investment even for those who do not have a lot of money.

It is important to note that palladium and platinum are not only investment metals but also industrial ones. The value of these metals depends not just on current market conditions but also on industrial demand. Those who are new to precious metal investments may want to start with gold and/or silver before investing in either palladium or platinum.

How to Invest

There are gold and silver bars, rounds and bullion coins. Coins are made by various countries around the world, but some of the best known coins are made by South Africa, the UK, Australia, the United States and Canada. It is usually best to buy well known coins, as these are the easiest to both purchase and sell. It is also best to buy a number of small coins instead of one large coin.

Those who are storing their investment in a 401K account should be sure that their investment is in line with IRS regulations. Gold must be at least 95% pure in order to be stored in a 401K; bars and rounds meet this requirement easily but not all bullion coins do. Silver must be 99.9% pure.

At the same time, it should be noted that any asset stored in an IRA account cannot be withdrawn easily. While this sort of investment is ideal for retirement purposes, it is not suitable for an investor who wants to make a profit off of one or more precious metals right away. It is also not suitable for those who have a limited amount of investment funds to work with and so cannot afford to put large sums of money in an inaccessible account.

Tax Implications

It is also important to note the tax implications of investing in any given metal. In most cases, it is possible to buy bullion coins made in the country one is living in without having to pay taxes on this purchase. In the United States, sales tax laws vary from state to state but a person can get out from having to pay a sales tax by purchasing gold from an online retailer based in a state that does not charge sales tax on online purchases.

It should also be noted that there is a capital gains tax imposed on those who sell any precious metal for a profit. However, this tax only affects those who make a profit of more than $10,000 in a single year. In fact, the tax laws governing the purchase and sale of precious metals are much simpler than those governing paper investments.

There are many reasons why one or more valuable metals is a good idea. Economic conditions almost ensure that these metals will rise in value even though prices are relatively low at the moment. Many investors are anticipating this rise and silver in particular is fast becoming a very popular investment option. However, simply buying one or more of these metals is not enough; a person will need to know when to buy and what form of any given metal to buy in order to successfully turn a profit. Taking the time to learn about how the precious metal market works is imperative and will help a person not only turn a profit today but even be able to save up an inflation proof investment for future use.