Economy Of Silver And Gold Prices

The gold prices spurred, and many consumers and investors switched to silver in 2018, leading to 160% (to 69.4 million ounces) growth in consumption of silver bars and 16% (to 76.5 million ounces) growth in the consumption of silver jewellery. The use of silver in electronics industry slightly, but due to cost cutting measures taken by manufacturers, the demand fell by 1%. This exponential rise in demand was the major reason driving global demand for silver jewellery rising by 4% and for bars and coins by 20%. The supply of silver however fell by 3% leading to physical market deficit of 29.2 million ounces. This and the economic and political turbulence would push the silver prices higher with silver touching 16.75/oz in 2019 and 17.5/ oz in 2020.

Gold and silver (precious Metals) are considered as safe haven by investors, and the gold and silver prices, more than the supply and demand economics, are influenced by investors who buy precious metals during economic and politically turbulent times. This time the demand for silver rose because investors switched to buying of silver from gold, as the gold prices spurred. Further, the demand for silver is not expected to see any drastic changes, since the fall in industrial demand for silver would be compensated by rise in investment demand for silver.

There are various places where you can park your extra money, for it to grow. Stocks, banks, property, metals, etc. When the economy is turbulent, and the investor is unsure of in which way the economy would move, they park their money in buying precious metals like gold and silver. This is considered a safe haven for investors. This since prices of precious metals do not drop that much. During such times, the prices of gold and silver, shoot up due to increase in demand of the metals. The prices follow simple laws of demand and supply.

In the above case, due to slow growth of economy, the prices of gold increased, and due to this the demand for the next best precious metal, silver increased. This led to increase in prices of silver.