Which Precious Metal Is the Most Volatile?

Which Precious Metal Is the Most Volatile?

December 26, 2018

The last couple years haven’t been the greatest for precious metal investors. After Donald Trump was elected president, the U.S. dollar quickly began a 15 percent decline. In many circumstances, declines in the dollar are good for precious metal investors, as the prices of gold, silver and other such precious metals tend to rise when the dollar falls. However, rather than gold surging past its previous high marks, gold miners and junior gold stocks were actually trading lower.

Gold itself has weathered the storm all right, but the gold stocks and silver have been lagging far behind. Precious metals are also not performing well in comparison to American equities, which keep pushing higher.

The state of precious metal volatility

The big issue is that volatility in the precious metals space is at a record low. While this has made for some frustration for some investors who maybe would have expected to see some bigger gains in 2017 and 2018, it could also be a sign that a significant move is not far off in the distance.

Investment analysts track the performance of precious metals and precious metal stocks very closely. Gold has been holding very steady for most of the last several years after about a decade’s worth of gains. Currently some of the volatility indicators used in tracking gold are at the lowest levels they’ve seen in more than 10 years.

Even the gold stocks, which are much more naturally volatile than the precious metals themselves, are showing some very low long-term volatility, hitting 15- and 25-year lows in terms of volatility according to some indicators.

It’s very much a market in stasis at the moment. While this can be frustrating to some investors, it can also be a positive in the sense that while the U.S. dollar is falling, gold is still holding on, even if not necessarily ballooning.

Where you’ll find the most volatility

So if there isn’t much action happening in the world of gold investing at the moment, where are you going to find the most volatility in precious metals? Look no further than silver.

Silver has been seeing increased industrial demand and is the second most-favored alternative to paper money. Its prices have been rising and falling with much greater frequency than gold in recent years. That presents a lot of opportunity for correctly timed investments to see some significant turnarounds. Plus, silver is cheaper on a per-ounce basis than gold, making it an easier market to enter for many people who are just beginning their precious metal investments.

Silver may seem like “small potatoes” to some investors, but if the goal is to find a precious metal that has significantly more volatility, one can do little better in that regard than to invest in silver.

For more information about current volatility indicators in the gold market and the outlook for both silver and gold investing in the future, we encourage you to contact the team at Gold Wealth Financial today with any questions you have.

- by Steve Hunt

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