What influences gold and silver prices?

Investing in precious metals, such as gold and silver, has been a popular way of saving money. Many people understand the variations in company share prices, but are ignorant as the factors affecting the price of gold and silver.

Real estate

Rising value of gold
For a long time, demand for precious metals have been seen as relatively stable. Since 1980 the price of gold has gone up by nearly 90 percent, but this has occurred during the same period of rising popularity of stock market investment. Profitable investments
Precious metals, like housing, are a long term, high value investment. When the housing market is doing badly, it is more likely people will want to invest in something more profitable, such as gold and silver.
Why price of metals have increased?
The increased demand for the metals forces the price up. Falling house prices in the aftermath of the 2007 credit crunch may explain why the subsequent years also witnessed a huge increase in precious metal prices.

Stock market

In a similar way to real estate, if demand for company shares goes down, due to a lack of confidence or a general downturn, investors will take money out of companies and invest in something more stable. This is usually short term as precious metals will be traded back for shares once the markets recover, but the increased demand will cause gold and silver prices to rise.

Trading

Gold and silver are traded like any other commodity on stock exchanges around the world. Like any other commodity prices, if there are fears of a global shortage, then the price goes up due to increased demand meeting falling supplies. Monitoring of supply of metals
This also works in the other direction with surpluses of precious metals causing a price fall. The supply of most commodities is closely monitored to ensure supply never reaches an extreme. The price is kept under control.

National crisis

Any national crisis, from a war to an earthquake, can result in rising prices for more stable investments such as precious metals. This is because during periods of unrest, people worry about the long term validity of paper money or company shares. Final word
The result of this panic is to push people towards a physical investment which is welcomed in all countries, rather than a more technical investment which can only be sold in certain places.