If you are interested in investing in silver or gold bullion, it is important to understand when is the best time to buy and sell. The valuation of both is complicated and dependent on many factors, including economic conditions, pricing for other commodities, and investor activity. Learn more about what drives gold and silver prices below.

A Guide to Understanding Gold & Silver Pricing

1. Supply & Demand

Gold and silver are unique in that they are not consumable, unlike other physical assets like oil or wheat. All precious metals that have ever been mined are still around, and more is always being unearthed. Despite this, certain factors can change both supply and demand. For example, a mining strike can interrupt manufacturing, temporarily driving up prices. New uses and products, such as silver in solar panels or gold circuits in electronics, can generate more demand.

2. Inflation

Silver and gold bullion are considered "safe haven" investments, particularly in times of economic instability and global conflict. This is why investors typically flock to these precious metals when inflation rises. Inflation diminishes confidence in the dollar, while gold and silver can protect against losses.

3. Central Banks

Central bank activity plays a major role in the value of silver and gold bullion. Gold and silver are a few of many reserve assets held by central banks, but they tend to handle these commodities differently. When foreign exchange reserves are abundant and the economy is healthy, central banks sell gold and silver. Investor interest will be lower at this time, however, so prices fall.

4. Real Interest Rates

Interest rate levels can serve as a meter for overall market conditions. When the economy improves and the federal funds rate is set to rise, gold and silver prices generally go down. Investors are not expecting to get a current return, so some will choose interest payments rather than long-term appreciation. Silver and gold have an inverse relationship with interest rates.

If you are looking to buy or sell silver or gold bullion, let Coins Plus be your trusted dealer. Since 1972, this team of knowledgeable numismatists has been the leading source of honest appraisals and a reliable dealer for buying or selling gold, silver, paper money, and rare coins. They are also the only PNG-accredited bullion dealer in Greater Cincinnati. Visit them online or call (513) 621-1996 for more information about gold and silver bullion dealing.