The prices on silver and gold are affected by various factors like economic downturns and upturns, demand policy decisions by governments and turmoil's in war torn countries.
It is a known fact during an economic depression, investors look towards precious metals as a safe haven for investments, due to which prices tend to rise. Inversely, when the economic and social situation is going strong, predictions are made of a positive future, as a result prices of precious metals tend to drop. Researchers who work on predicting the prices of metal refer to the historic pricing data as how metals perform during certain economic, social and war situations. The graph followed over a certain era gives them an estimate on the nature of the metal's reaction to given conditions.
Various metals do not necessarily follow each other's path. While behavior of gold and silver prices is likely to depend on each other, palladium and platinum respond to demand and manufacturing. Although values of all these four metals are quotes along each other on market charts, they behave differently because palladium and platinum are industrial commodities whilst silver and gold are used more into investments.
Where gold and silver price is concerned, the economy of United States and the decisions made by its government have a major impact on their future predictions. If the US economy is ailing and the dollar is weak, prices fall and vice versa. As prices on silver are dependent on gold, gold prices get affected first while silver prices follows them.
Investors are also concerned about the changes in the exchange rate, as a downward trend will result in rising prices and vice versa. When exchange rates freeze in a certain zone, the prices of precious metals also float around a small pricing zone.
Economic depression and recession have turned out to be a major reason for the rising and falling prices of precious metals, since speculation have a tendency to affect the volatile nature of prices on metals. Investors want to fall back on dependable investments like silver and gold during crisis as they view the metals as a store of value and hedge against fixed assets. As economies improve, investors start selling the metals leading to drop in prices because the market is swamped with metals.
Natural disasters, major political events, change in currency values cause variations in the prices of precious metals though they are not directly responsible for it. Wrong speculation also results in premature buying or selling of the metal that causes unnecessary volatile fluctuation on the market graph.