A thorough understanding of the economy can take years to understand. However, when investing in silver and gold bullion, even a quick lesson can improve your financial standing. Use this guide to learn why precious metal prices rise and how you should interpret these changes.

What Makes Precious Metals Rise in Value?

Supply & Demand

Along with the rest of the economy, precious metals are affected by supply and demand. When more people want silver and gold, demand for these precious metals increases, causing prices to advance. When plenty of gold and silver sits on the market, supply increases, and prices decline.

The mining processes may influence supply for gold and silver. For example, if the miners at a silver plant go on strike for fair pay, the mining will cease indefinitely. With less silver available to sell, prices will rise. 

Supply and demand is a constant game of give and take, which is why metal prices are not just a depiction of the present—predictions about future supply and demand from economists and the metal mining industry will also impact their value.

For example, if families across the country learn that silver is at an all-time high, they might rush to their local dealer to cash in their silverware and jewelry. As a result, the amount of silver in the marketplace will rise and the price will decline.

With the prices of precious metals constantly in flux, a number of websites offer live updates based on market research.

Usage

Applications affect the prices of precious metals, such as the use of silver and gold in technology and manufacturing. If these materials are used for industrial purposes, they might be harder to get a hold of, causing demand to increase.

For example, silver is a key component in the electrical components used to create 5G telecommunications networks. It is also used by healthcare providers to help heal wounds.

Political shifts can also affect the consumption of these natural resources, which would then affect their price. For example, Citi Bank analysts have suggested that should Joe Biden win the election, his green infrastructure plan could increase demand for silver. This plan includes the construction of clean light rail and bus systems and energy-efficient renovation incentives, which involve the use of silver.

Gold vs. Silver

It is also important to remember that, even though they are both considered precious metals, gold and silver are different substances. While gold is more valuable, silver is more volatile. It is more prone to fluctuations in value, so if you sell at just the right time, you could earn more bang from your investment. 

Silver’s relative volatility can be traced back to its liquidity, or the frequency at which it changes hands. There are fewer buyers and sellers interested in buying silver, so when people are ready to make a deal, supply and demand can shift significantly.

With gold, buyers and sellers are constantly active, leading to a steady hum of liquidity and more stable pricing. 

As mentioned above, silver is also more sought-after for industrial uses, from construction to medical care. This is likely because it is not as soft as gold and can hold up better structurally. Industrial applications make up almost 90% of silver’s demand, and since business is always in flux, this further increases the metal’s pricing irregularity. 

Why Should You Sell What You Have?

To make some extra cash, it may be best to sell silver and gold bullion now. A decline in the national economy will naturally cause the price of tangible objects, like precious metals, to rise. Investors want to own something that will not lose its value in an economic crash. While paper money and stocks will, silver and gold will not.

2020 has already included a number of events that severely impacted the U.S. economy—most notably, the new coronavirus. The COVID-19 pandemic has caused millions to file for unemployment, businesses to shut down all at once, and the majority of the country to stay home. Seeing these warning signs of economic disaster, investors throughout the country have flocked to put their money in the safest possible form: precious metals.

Analysts also believe that the recent explosion in Beirut, which sparked fear of geopolitical tension, enhanced demand among investors. As a result, gold prices reached a record high of $2,021 in August, the highest price point since November 2011. If you sell now, you can take advantage of increased demand and make a record profit on your gold bullion, coins, or jewelry.

Additionally, analysts expect the return on silver prices to overtake those of gold, mainly because of the recent uptick in manufacturing activity. So no matter which type of precious metal you are holding onto, it may make sense to sell it now.

If you are struggling to pay off your mortgage or make your rent due to the economic strain of the pandemic, you can take advantage of bullion’s strong purchasing power.

Why Might You Want to Buy?

During times of economic and political unrest, people of all income levels worry about money. However, for those with investments in the stock market, these areas can be particularly distressing. With the value of the dollar and stock market constantly fluctuating, investors must be wary of a correction.

But when you invest in precious metals like gold and silver, your money is in a much safer format. If banks fail, you won’t have to worry about them taking your savings with you.

The COVID-19 pandemic has taken its toll on people throughout the country, leading to mass exoduses from cities and record-breaking unemployment rates. That is why, for those with money to spend, now is also a smart time to make a “safe haven” investment in gold and silver. These precious metals retain their value, offer increased purchasing power. With their prices expected to continue rising, it is better to make your purchase as soon as possible while they are relatively low. 

Metals are an alternative to cash that can protect your purchasing power against inflation. For example, while a ticket to the movies might have been $1 in decades past, they are now around $15 to $20. However, when compared in the same interval, silver and gold items have not changed as drastically in value. 

Another factor to consider is the state of the U.S. economy compared to those of other countries. Due to America’s increased spending on coronavirus-related efforts, the U.S. dollar is decreasing in value compared to other currencies. If the value of the dollar falls, silver and gold bullion will retain their purchasing power.

Since increased demand leads to an increase in metal prices, procrastinating on your investment is not wise. The longer you wait, the more expensive it may be to purchase gold and silver.

 

If you are debating whether to buy more silver and gold or sell the precious metals you have, reach out to Coins Plus of Cincinnati, OH. Since 1972, this trusted coin dealer has been selling, buying, and appraising precious metals. Whether you want to invest in gold bullion or are searching for the next addition to your rare coin collection, you can rely on their expert advice. To learn more about this "National Award Winning and PNG Dealer,” visit the website. You can also call (513) 621-1996 today to speak with a friendly staff member and numismatics enthusiast.