Silver Following Suit With Gold Price Congestion

Although following a slightly different pattern, silver prices are following gold in extended price congestion. This price formation is far from being unusual for silver prices, but the outcome in the case of silver is more difficult to predict.

The white metals is generally more difficult to analyse than gold. This is partly due to the fact that so much less is known about the specifics of the silver market, and silver price analysis is often done through the analysis of gold prices. This is not completely wrong, since silver and gold mostly move in a similar manner as they have the same monetary properties, and are both equally trusted hedge investments.

Silver and gold comparison

It must be understood, however, that despite their similar properties, the two precious metals have different monetary histories at least for the last 400 years. These different histories have caused silver to be scarce in a monetary form such as silver bullion suitable for pure investment. The fact that few central banks hold large quantities of silver, compared to gold, is testimony to this effect of dissimilar monetary history.

Relative price movements of gold and silver, especially with regard to timing and volatility, can explicitly be seen on charts. One example of such a difference is the fact that gold often bottoms before silver does. The bull market that is theoretically still in progress started after gold bottomed in 1999, whereas silver only bottomed in 2001.

The exact same thing happened in 2013. The start of a divergence for silver prices began this year. This kind of divergence is the reason why many investors look at silver and gold’s relative performance, and then draw the conclusion that silver is not real money (at least not as real as gold), when in fact when gold is on its way to be valued fairly, silver is at a different place.

Even though silver took a much harder beating than gold last year (silver was valued at over $32 an ounce in January 2013), it didn’t follow the yellow metal in its recent rally and only made a short dash to the $22 per ounce mark in late February. Since its bounce from the strong support low of $19 per ounce in April 24, the white metal is moving towards a balance price of around $19.50 per ounce.

Silver investment potential

As its price has been until now unaffected by rumors of war, the debt problems of all major governments and failing fiat currencies, silver is now incredibly good value, and the long expected upcoming silver price rally will likely outperform everything else; the outlook for silver has never been better despite attempts to keep it under wraps at the moment.

Silver will be one of the best investments to own in the future, there’s no question about that. It just takes a great deal of patience to realise the gains. Current prices are definitely a great buying opportunity towards a long term investment, and offers an amazing range of silver bullion products to suit your taste and budget.