• English
  • Deutsch
  • Español
  • Français
  • Italiano
  • Русский
  • Polski
  • 日本語
  • 简体中文
  • 繁體中文
  • Daily audit
  • Help
  • Contact
  • Deposit
  • Login
  • Open account
  • ABOUT US
    • About BullionVault
    • In the press
    • Reviews
    BUY/SELL BULLION
    • Live order board
    • Daily price
    • Regular Investing
    INVESTMENT GUIDE
    • Guide to gold
    • -How to buy gold
    • -Gold investment
    • -Gold investment plan
    • -Investment insurance
    • -Compare asset performance
    • Guide to silver
    • -How to buy silver
    • Guide to platinum
    • -How to buy platinum
    GOLD NEWS
    • Gold news front page
    • -Gold price news
    • -Opinion & analysis
    • -Market fundamentals
    • -Gold/Silver Investor Index
    • -Infographics
    CHARTS
    • Gold price
    • Silver price
    • Platinum price
    • Price alerts
  • Login
  • Open account
  • BUY/SELL BULLION
  • Live order board
  • Daily price
  • Regular Investing
  • INVESTMENT GUIDE
  • Guide to gold
    • ⤷
    • How to buy gold
    • Gold investment
    • Gold investment plan
    • Investment insurance
    • Compare asset performance
  • Guide to silver
    • ⤷
    • How to buy silver
  • Guide to platinum
    • ⤷
    • How to buy platinum
  • GOLD NEWS
  • Gold news front page
    • ⤷
    • Gold price news
    • Opinion & analysis
    • Market fundamentals
    • Gold/Silver Investor Index
    • Infographics
  • CHARTS
  • Gold price
  • Silver price
  • Platinum price
  • Price alerts
  • ABOUT US
  • About BullionVault
  • In the press
  • Reviews
  • Help
  • Contact
  • Daily audit
    • English
    • Deutsch
    • Español
    • Français
    • Italiano
    • Русский
    • Polski
    • 日本語
    • 简体中文
    • 繁體中文

Gold News

Live support

NEED HELP? ASK US NOW

Search form

Gold News front page

Gold Price News

Silver Price Up 3.2% on Week as Trump Turns on Opec, Inflation 'All Over' Philly Fed Data

More...

Gold Investing In Depth

Learn about gold bullion bars

Learn about gold bullion coins (and costs)

Gold investment: Why & how?

Gold Investment Analysis

  • Latest Gold Investor Index
  • Diversification: Gold as investment insurance
  • 40-year Asset Performance Comparison Table

Gold Articles

Opinion & Analysis

Gold Price News

Investment News

Gold in History

Gold Books

Gold Investor Index

Gold Infographics

Archive

  • April 2018 (23)
  • March 2018 (45)
  • February 2018 (31)
  • January 2018 (38)
  • December 2017 (31)
More...

List of authors

Is Silver Nailed to Gold?

Monday, 9/20/2010 12:00

What law of the universe says Silver Prices must always move together with gold...?

FOR THE last few years, silver has moved in relative tandem with the Gold Price, writes Julian Phillips at GoldForecaster.

We called it the 'long shadow of gold' because it would rise further and fall further than gold, but they did move together. Occasionally silver did pause as gold rose but the 'shunt' effect (when a train pulls forward with a line of carriages in tow and each jumps forward as their links tighten) kicked in and it jerked forward to catch up with gold's moves.

Many investors keep their eyes focused on the Gold/Silver Ratio (how many ounces of silver it takes to match one ounce of gold in price) and trade it regularly. Right now that ratio is at 60. However, by coupling we also mean will they continue to act and react together on a daily basis, apart from price differentials.

When it comes to market prices moving up and down and sideways together, we are not looking at the commodity aspects of the metals, but the market perception that these two are precious metals that were money for the bulk of man's history. Savings were expressed almost entirely in these metals and once deemed as the only valid money around.

This is where the relationship between the two metals is anchored. Because despite any industrial or jewelry uses that do not relate to wealth retention, gold in so many parts of the world is considered money. The developed West does not consider it so, even in the face of over 30,000 tonnes of gold being held in central banks worldwide. (Many central banks now Buying Gold, with Thailand most recent.) But even developed world central banks are keeping a firm hold on what they do have. So we must ask, are these simply precious metals or do they serve some as real money?

This is critical to the movements of gold and Silver Prices. If the overall perception of the two is as future 'money' (as a measure of value) then they will reflect the levels of uncertainty over fiat money. In support of this come the comments by Alan Greenspan, spoken as recently as last week. At a Council on Foreign Relations meeting, Dr Greenspan commented that he'd "thought a lot about Gold Prices" over the years and decided the supply and demand explanations treating gold like other commodities "simply don't pan out".

Greenspan had concluded that gold is simply different. He said:

"If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it."

We believe central banks are doing just that.

As we enter what could be a volatile period for international currencies as Treasury Secretary Timothy Geithner begins a more aggressive tact against China's Yuan exchange rate (the Dollar is slipping again) and Japan intervenes to weaken the Yen, confidence in fiat currencies ability to truly measures value is waning. That's why the two are moving together and will do so in the future.

We qualify that to some extent, as some fundamental factors affecting the two precious metals are affecting the Silver Price in particular. Another change is emerging in the silver market in the developing world. In both India and China amongst smaller investors, silver is far more affordable as the Gold Price roars out of their range. So the concept of silver being the 'poor man's gold' is rising fast and showing itself in the rapidly rising demand for silver in those nations. This represents a small but significant diversion of demand away from gold to silver as prices rise for the two metals.

Gold has seen a halt to central bank selling in the first year of the third Central Bank Gold Agreement. Silver has only now seen an end to 'official' selling by India, China and last of all Russia. This has allowed a good source of supply to disappear and forced the buyers of that silver to go to the open market to get its silver. In addition, the decline in uses in photography is being overtaken in the new uses for silver in solar panels, 'rfids', medicine and other electronic uses. All this silver is being consumed and will be until its monetary role in the long-term prices it out of the consuming markets and, like gold, it is simply stored not consumed. Most of you will not believe that is a possibility. The net result of these two changes in silver's fundamentals will be for silver's price to rise much faster than the Gold Price in percentage terms.

It is not our purpose here to detail where the Silver Price is going, but we can say that we expect a narrowing of the Gold/Silver Ratio. But we do not think that the gold and silver prices will de-couple in terms of moving in relative tandem. Rather, in percentage terms there will be a widening of that coupling.

Buy Silver at the lowest prices and store it – securely – at the lowest costs in dedicated, professional vaults at Bullion Vault...

  • Reddit logo
  • Facebook logo
  • Twitter logo
  • Google logo
  • Yahoo logo
  • LinkedIn logo
  • Digg logo
  • StumbleUpon logo
  • Technorati logo
  • del.icio.us logo

JULIAN PHILLIPS – one half of the highly respected team at GoldForecaster.com – began his career in the financial markets back in 1970, when he left the British Army after serving as an Officer in the Light Infantry in Malaya, Mauritius, and Belfast.

First he worked in Timber Management and then joined the London Stock Exchange, qualifying as a member and specializing from the beginning in currencies, gold and the "Dollar Premium". On moving to South Africa, Julian was appointed a macro-economist for the Electricity Supply Commission – guiding currency decisions on the multi-billion foreign Loan Portfolio – before joining Chase Manhattan and the UK Merchant Bank, Hill Samuel, in Johannesburg.

There he specialized in gold, before moving to Capetown, where he established the Fund Management department of the Board of Executors. Julian returned to the "Gold World" over two years ago, contributing his exceptional experience and insights to Global Watch: The Gold Forecaster.

Legal Notice/Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold Forecaster/Julian D.W. Phillips have based this document on information obtained from sources they believe to be reliable but which it has not independently verified; they make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Forecaster/Julian D.W. Phillips only and are subject to change without notice. They assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, they assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this report.

See full archive of Julian Phillips.

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, RSS links are shown there.

Follow Us

Facebook Youtube Twitter LinkedIn

 

Mobile apps

 - live trading 24/7

 - buy & sell instantly

 - up-to-the-second charts

 

 

 

Daily news email
Go to 'communications settings' 

Get the latest daily gold price news free by email

Latest gold news by email

 

 

 

Gold Investor Index
3 April 2018

Gold Investor Index

Gold investing slips despite stockmarket drop

 

 

 

Moneycontrol
28 March 2018

Moneycontrol

3 key signals in gold

 

 

 

Daily Express
22 February 2018

Lehman Brothers collapse, 2008

10 years after the financial crisis

 

 

 

Is Bitcoin the answer?
7 December 2017

Bitcoin bitcoin bitcoin bitcoin bitcoin

Paul Tustain on money, gold and Bitcoin

 

 

 

  •  Syndicate Gold News
  •  Email us

Market Fundamentals

  • China's Gold Mining Output Shrinks Again
  • Silver Trading 'Oversold' on Record High Short Position
  • 2018 Gold Price 'Could Hit $1450'
More...
  • Cost calculator
  • Cookies
  • Terms & conditions

©BullionVault Ltd 2005-

  • Twitter
  • Facebook
  • Google Plus
  • LinkedIn
  • YouTube