The Modern Functions of Gold and Silver
In contemporary society, Gold and Silver are a lot more dynamic than most people understand. It is true that jewelry is a very popular and definitely the most visible use of Precious Metals, but it is hardly the only market for Gold and Silver and there are greater drivers of demand. Everyone in the world, from investors to automobile manufacturers to a random lady walking down your street has an interest in Precious Metals. The diverse sources of demand for Silver and Gold are part of what drives their value.
Tangible Gold & Silver
The two most common ways you will notice other people holding Gold and Silver are in the form of jewelry and investment products. The third primary function of Precious Metals is industrial applications. The types of metals used vary across the board from industry to industry, and of course investors own the majority of fine Gold and fine Silver worldwide. It is important to understand that “investors” does not necessarily mean an individual person holding Gold and Silver. Everyone from private citizens to central banks to governing bodies of powerful countries invests in Precious Metals. You can be certain that almost everyone, everywhere wants to own their fair share of Silver and Gold.
Function as an Investment
Gold and Silver are the most enduring form of currency in the whole world. Every civilization from time immemorial has recognized the intrinsic value of Silver and Gold. If you put some paper money in a box today, you can open the box in 20 years and you will have the exact same number of dollars as you did 20 years ago. If you were to buy Gold or Silver and put it in that same box, however, there is a reasonable chance of opening that box in 20 years and, when measured in dollars, finding quite a bit more money than you put in. Simply put, this is the difference between having money and investing money.
The reason governments have become interested in owning Precious Metals relates directly to their concerns about the geopolitical climate and their confidence levels in worldwide currencies. If a government has the choice of having assets in the form of a fiat currency that could conceivably collapse or Precious Metals which have a track record of sustaining significant value literally over thousands of years, you can see why they have been holding Precious Metals more and more frequently in the past decades.
Gold & Silver Trading
Gold and Silver trading is always particularly active when there is economic worry. Though the economic experts disagree about the exact nature of the correlation, many feel that Precious Metals represent a safe bet in a time of financial uncertainty. That said, in the past 100 years there have been significant in every direction in both the Gold and the Silver market. While unusual economic conditions can certainly stimulate big movements in Precious Metals markets, there are other circumstances that might cause activity there, as well.
In the 1980s and the 2000s, both noteworthy as periods of sustained economic difficulty, Gold and Silver both realized significant gains. However, it is important to note the difference between these two economic upheavals. The collapse of Gold and Silver in the late 2000s was not dramatic, and bounced back fairly well and relatively quickly. This was not the case in the 80s. This is a primary difference between a pullback and a real bubble. Gold and Silver have recovered most of their latest pullback and are stable now. If there is one thing that almost every expert agrees upon and every chart you can find will bear out, it is that Precious Metals have always provided a safe place to put your money during periods of economic distress.