While gold and silver prices remain strong, there has been a strange trend in the markets.

November 18, 2010 – While gold and silver prices remain strong, there has been a strange trend in the markets since September: rather than moving opposite stock prices they have been in tight correlation with them. The relationship is clearer with gold prices because the movements are similar in magnitude, but even the more volatile silver prices tend to be moving in the same direction as stocks. And that appears to be true across the commodities market.

The world wide stock selloff Tuesday went hand in hand with a commodities selloff and one of the few gainers was the diluted dollar. If that makes little sense to you don’t worry – you are in good company. Economists around the globe have been struggling to make sense out of globalization since the Asian financial crisis caught nearly everybody off guard in 1997.

The problem is that traditional models fail in a macro economy composed of micro-economies in vastly different stages of development and on varying points of their economic cycles. In isolation national economies are fairly easy to understand, but when lumped together the complex interactions begin to look almost random, just as local weather forecasts are reasonably accurate but global climate remains a mystery.

The uncertainty of global economics should be of little concern for investors in gold and silver, however. Gold has been a standard of global trade from the very beginning and its value transcends the vagaries of stocks and currencies. The growth in gold and silver is completely natural under the economic conditions we face today, and until global economies become synchronized investors will continue to seek safe haven in gold and silver investments.

Shannon King

Senior Staff Writer –

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