Who determines Gold and Silver Prices?
SummaryAs an investor or probable gold and silver investor, discerning the facts that determine gold and silver prices is crucial if you would like to produce a profit. There are numerous facts that influence these prices and I cover iii critcial ones, namely Supply and Demand, the World Politics and the value of the U.S. dollar.The video below summarises the key messages in this article


In an age of uncertainity, where markets are fluid, Gold & silver are oftentimes thought of as key investments. Beginning approximately the mid 90's the gold & silver prices have climbed upward a steady curve. Such a constant resolute rise in price caused numerous dealers and investors to purchase such sought-after commodities as Gold and Silver. Those that secured their funds or earnings on these commodities have gotten out massive profits as the spot silver price and that of Gold has constantly grown. As the economies sunk into the worst recession since the great depression, gold & silver prices peaked against all odds reaching a new all time high.In order to fathom what i am implying here, just take a look at the latest spot silver price (though o'er the last couple of days, this had been entrapped in a minute trading distance between 35 bucks and forty-two dollars per ounce) vs the historical prices.

Thus if Gold & Silver prices have maintained their position over time, the biggest wonder that begs to figure out then is what actually affects these prices?. I will cover three fundamental elements that shape these prices.

1. The first factor is Demand and Supply. Gold & Silver prices are conditional to these elements. Investing in these instruments is surely a sensible and prudent move, although it does come with a huge gamble!. WHY is this so? Well as a lot of folks realise the profitability in holding gold or silver, its demand is very high, thus the spot price silver or gold swings from day to day due to the immense demand and subsequently traded volumes.

2. Politics of the economy. Political events such as war, bulging country shortfalls and geo-political upheavals have effect on gold & silver prices. The rationality for this is simple, in states as these, most investors rush to buy gold and silver to hedge the value of their funds, thence again pushing demand, while supply stays still or actually plumets. The issues presently playing in the Libya, Tunisia, Iraq today etc are all determining price of gold and silver prices today. In fact gold and silver are international reserved currency of the world. Therefore, if anything comes about around the world therefore it surely affects the gold and silver price.

3. The last element i will cover briefly is the relationship between the the gold & silver prices and the value of the U.S. dollar. In the economic market the price of the precious commodities is determined by the economic value of US$. This is why whenever the value of US $ goes down, commodity prices goes up and vice versa. Whilst the value of U.S. currency goes down then goods get affordable for the customers, which bring on the buying and ups the price of gold and silver.