Gold News

Silver Price Following Gold Closely

THE SILVER PRICE has risen over 18 Dollars an ounce recently, following the rise in Gold Prices closely, notes the much-followed Lex column in the Financial Times.

The current financial and consumer situations are driving up the Silver Price along with the Gold Price, says Lex. Silver has risen from a low of $4.50 an ounce in 2001 to the recent high of $18 an ounce, and this follows the Gold Price increase and its recent all-time high.

The current rate of growth for the Silver Price will most likely increase its appeal as an investment material. Silver can seem a cheaper alternative to gold, because it costs less per ounce, but both also have their own benefits.

Gold and Silver Prices move closely together. According to our research at BullionVault, from 2005 to 2010 the Silver Price showed an average daily correlation of 0.77 with the Gold Price (rolling one-month basis). For the prices to move completely in step, the correlation would be +1.0. A correlation of -1.0 would mean they move in precisely opposite directions.

However, silver has an average volatility of 35%, compared with the average daily volatility for gold of 20%. This shows Gold is more stable, and so will probably appeal to more cautious investors, but silver has greater capacity for fluctuations, which can increase short term profits.

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Roy Peel is working as a research assistant at BullionVault, the world's No.1 gold and silver ownership service for private investors.

See the full archive of Roy Peel articles.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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