What Drives the Price of Gold and Silver?

Updated: Mar 30, 2021

What drives the price of gold and silver? How do gold price and metal price affect jewelry buyers? Is gold a good investment?



According to Investopedia, as of March 2021, the price of gold is over $1,700 per ounce. This fluctuating price is strongly motivated by supply and demand. This supply-demand rate has changed significantly over the last 100 years, especially when we consider that gold and silver are no longer just used for jewelry. Because gold is used in more varied ways, gold price is guaranteed to go up (high-demand). For example, gold is commonly found in the manufacturing of electronics. As a transition metal, it is a very efficient conductor of electricity and has very little chance of corrosion or tarnish.


white gold and blue cambolite ring

So what does this mean for you as a jewelry buyer?


Well, there aren’t two separate reserves of gold, one for tech and one for jewelry. This means that all of the gold is being pulled from the same pot. So, as the demand grows, you can expect to pay more money for gold and silver jewelry.


The same goes for silver. Although it's more affordable (less demand), it’s still used in large quantities across a variety of industries. For example, silver is included in LED chips, Nuclear reactors, touch screens, the dentist (for cavities), and even water purification. These are just a few of the purposes that silver can be used for, but it gives you an idea of how easy it is for this metal to increase in value as demand increases.


According to MONEX, the current price of silver is $26.33 per ounce. This is significantly affordable compared to the price of gold. As a traded commodity the price of silver peaked in January 1980 when it reached $49.45 per ounce. This was the first time in history that silver had ever been valued so high, and it hasn’t happened since.


But, gold and silver aren’t just for jewelry and tech devices. Some people look to these metals as solid investment opportunities. According to Investopedia, many of the world’s nations have bank reserves that are primarily comprised of gold, which means that the price of gold is also subject to change based on the ways in which these institutions diversify their paper (money) reserves.


According to the World Gold Council, Turkey was the largest buyer of gold in 2019, followed by Russia, Poland, and China. In total, governments purchased a total of 650 tons of gold. This is why the current price of gold is so high. Not because this gold is necessarily in circulation and actively being used to make jewelry or supplement tech advances. But because central banks belonging to countries are using it as an investment strategy.


But, it’s not only banks that can do this. The everyday person is also able to purchase gold and silver.


Here at BoBen Designs we offer this service. Just bring in your gold or silver, and we will give you a fair price. We can even melt down existing metals and make you a one-of-kind piece of jewelry that you can wear for a lifetime.




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