Question

Does the silver bullion market represent an economic bubble?

The silver bullion market displays times of advancement and shrinkage, does this alone define it as an economic bubble.

As an example, to help you answer this question at one point in the silver bullion market the value of silver was $10 per troy ounce.

More and more individuals began purchasing it at this $10 amount until it became a scarcer resource, this led to a price increase of $30, which then was followed by a decrease to $9 because everyone who owned silver liquidated their stocks.

Answer 1

Contrary to both conventional & popular opinion, silver & gold may not be the greatest hedges against inflation nor the securest of havens. In several ways, they’re just like any other asset- their prices rise & fall , and knowing which direction they’ll move in the future depends upon manifold factors.

Though both may be preferred for their usage as stores of value, unlike gold, silver is prized mainly for its industrial use. These distinctions in demand basics denote that the 2 metals may react differently in different economic circumstances & shouldn’t be regarded as perfect substitutes.

A study finds that though gold price volatility is impacted by monetary determinants, such as inflation / interest rates, silver isn’t & hence the 2 metals should be regarded as distinct assets.

Yet, another study claims that though they act as secure havens during the same equity & bond market crashes, there’re times when only silver acts as a comparatively secure haven & other times when only gold does.

A 3^rd study claims that as silver’s demand is impacted more by its industrial suitability, it will be more closely correlated with overall market activity. In other words, if economies are booming, there’ll be higher demand for silver than when economies are in a slump. Hence, silver investment when the market is heading for problem may not be as secure as some analysts say.

Ultimately, when considering the volatility of these 2 metals, we find that gold is the securer asset as silver is the more volatile . Still, when comparing with other assets, gold isn’t essentially the least volatile.