Gold and silver are considered as a stellar investment during the time of fear such as recession. Since 1995, the gold & silver prices have risen steadily. This steady rise in price induced many traders and investors to invest in such precious commodities. Some of them invested money on these metals and earned lots of money. You must have witnessed that when world's financial market was falling than the gold & silver prices achieved a new peak. This is why investing in gold and silver is considered as the best investment during all days. However, the biggest question that arises is what actually affects the gold & silver prices.
Metal Commodity price also depends upon the demand and supply. Investing in in these commodities is certainly a wise decision but it comes with the heavy risk. The gold & silver prices swings daily due to the heavy volume. The prices of both metals depend upon war, bulging country deficits and geo-political unrest. The inflation and deflation also gets affected by the gold & silver prices. Often, people turn to the hard assets like gold and silver when supply of money is increased in market. The increase in money supply reduces the value of money. However, gold and silver never lose their worth over time.
Moreover, during deflation people again invest in gold & silver to secure their money. The gold & silver prices also affect the value of U.S. dollar. Since, in the international market the price of the precious metals is determined by the value of U.S. dollar. This is why whenever the value of U.S. dollar goes down metal prices goes up. When the value of U.S. currency goes down than metal commodities become cheaper for the investors, which induce the buying and raises the price of gold and silver. The gold and silver are global reserved currency of the world. Therefore, if anything occurs around the globe then it certainly affects the price of gold and silver.
