Are Silver Prices Independent from Gold Prices?
June 23rd, 2008 Posted in FX Education, Oil and Precious Metals
What is silver, what is it used for, where does it come from? Was silver ever used as money? Will silver be used as money once again? Are silver prices independent from gold prices? We know you have asked yourself these questions. This is why, we at Forexyard, sat down to answer all these questions to the fullest, for your benefit.
What is silver, what is it used for, where does it come from? Most silver is produced as a by-product of copper, gold, lead, and zinc mining. Silver has the highest electrical conductivity of any element and the highest thermal conductivity of any metal. Because of this it has been known since ancient times as a precious metal. And used as ornaments, jewelry and high-value tableware to currency coins.
The next logical questions are: Was silver ever used as money? And will silver be used as money once again? It was used as money from ancient times up to the 20th century when the world changed to fiat money. And thus the world is happy to trade in the likes of the forex market; therefore silver will most likely not be used as money once again.
As we have just learned, silver was used as money and you have probably derived that gold was used as money too. Then you have definitely come up with the following fascinating question. Are silver prices independent from gold prices? Many analysts don’t think so. A UBS, which is a diversified global financial services company, defined this phenomenon by concluding that Silver has a less liquid nature meaning that it outperforms during periods of metal price strength but lacks of price elastics. Such characteristics make silver vulnerable to collapse when gold corrects. Thus the analysts do not view silver as an independent metal.
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Tags: Gold, gold prices, money, silver, silver prices
