A history of Gold and Silver Prices - What every budding investor should know

As an investor or likely gold and silver investor, appreciating the factors that impact gold and silver prices is critical if you want to make a return. There are a lot of facts that affect these prices and I cover iii important ones, viz Supply and Demand, the Politics of the economy and the value of the US $.

In an age of global economic crisis, whenceforth markets are precarious, Gold & silver are frequently thought of as stellar investments. Since approximately the mid nineties the gold & silver prices have went upwards a stable curve. Such a constant unfaltering rise in monetory value pushed many traders and investors to leverage in such wanted commodities as Gold and Silver. Those that bonded their finances or cash on these metals have yeilded large returns as the spot silver price and that of Gold has resolutely moved up. Despite the global meltdown recently experienced, gold & silver prices defied economics and peaked to an all high.If you want a better understanding of my above analysis, do look at the current per ounce gold and silver prices (although o'er the last couple of days, this had been entrapped in a narrow trading space between thirty-five bucks and forty-two dollars per ounce) vs the historical prices.

The short introductory video below, covers three important factors driving gold & silver prices today.

Therefore if Gold & Silver prices have maintained their status across time, the biggest wonder that implores to solve then is what really affects these prices?. I will consider three fundamental ingredients that determine these prices.

1. In economic terms, the single major determinant of any product is demand and supply. Gold & Silver prices are subject to these forces. Investing in these commodities is surely a thoughtful and prudent act, tho' it does come with a large danger!. WHY is this so? Well given that most people know the economic value in investing in gold or silver, its demand is actually high, thence the spot price silver or gold swings every day due to the huge demand and subsequently traded volumes.

2. The political economy. Events suchas war, bulging country shortfalls and geo-political upheavals have a bearing on gold & silver prices. The grounds for this is ovate, in times such as these, many investors rush to buy gold and silver to hedge the worth of their funds, thereby again pushing demand, when supply remains stable or actually plumets. The events currently going on in the Libya, Tunisia, Iraq today etc are all impacting price of gold and silver prices today. In principle gold and silver are global reserved currency of the world. Whenceforth, if anything happens around the world thus it certainly affects the gold and silver price.

3. The last factor i will address briefly is the relationship between the the gold & silver prices and the value of the US$. In the world metals market the price of the treasured metals is determined by the value of U.S. dollar. This is why when the value of U.S. dollar goes down, metal prices goes up and vice versa. Once the value of U.S. currency goes down then metal commodities get cheaper for the investors, which induce the buying and elevates the price of gold and silver.