Although both gold and silver are precious metals, they don’t always react the same. The last couple of months have been proof of that as each has taken a different path to get to its current position. While they have taken different paths to this point, both appear ready to make an upward move going forward.
From the all-time high in late November, gold has dropped more than 10% to its current price of $1,080 per ounce. While some see this as a natural correction due to sell off, other analysts point to the rise of the Dollar Index and lower demand as drags on gold success. The jobs picture and stagnant growth in the US appear likely to thwart any substantial gains by the dollar, making an upswing in gold prices more possible.
Silver also hit a high of over $19 per ounce in November, but quickly fell back to the $16 to $17 range where it has been ever since. Silver appears to be stuck in a bit of a rut, struggling with a weak economy and a stronger than hoped-for dollar. Unless the economy can gain some strength without the dollar following suit, it could mean a period without substantial growth for silver.
Since gold and silver prices are currently down for different reasons, a wise investor might use each for a different investment objective. While gold is in a period of volatility, investors might consider short term investing in bullion. This allows them to capitalize on price swings quickly and effectively. Silver, on the other hand might be favorable for a longer term investment. With its being almost 20% below its November high, holding silver bullion or certified coins could allow investors to grab the lower prices and hold the metal until the trend turns.
Although gold and silver have differing approaches at this time, this can play right into the hand of the trader. Investors should use the circumstances at hand to form a successful strategy.
Senior Staff Writer – GoldSilver.org