Silver Price Refuses To Follow Gold, So Far

London (May 23)  Gold and silver have been closely linked for over five thousand years. In around 3000 BC, the first Egyptian Pharaoh Menes stated that two and one-half parts silver equal one-part gold. The statement in ancient times was the first time the metals that are the longest standing means of exchange in the world would be linked. Gold and silver have a dual role. As metals, they are both commodities, but also have a history as financial assets. Both precious metals have industrial uses because of the physical characteristics. They are also adornments that symbolize wealth and beauty.

Central banks still hold gold as part of their foreign exchange reserves. Approximately 20% of all the gold ever mined in the history of the earth is the property of governments, central banks, and monetary authorities around the world. Both gold and silver were once held as backing for currencies. These days, fiat currencies only have the backing of the full faith and credit of the countries that print paper legal tender. While most still hold gold as part of their reserves, silver has taken a backseat to the yellow metal on the central bank scene. However, both are still precious metals, and they tend to move higher or lower together over time.

Gold falls to a new low in 2018; silver does not

Until May 15, the low in gold for 2018 stood at $1302.30 per ounce, and the $1300 level stood as a critical psychological support barrier for the yellow metal. However, the weight of a recovering dollar and higher interest rates proved too heavy for the yellow metal, and it declined through the $1300 level to a low of $1281.20 on May 21.

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