Gold Price Falls Victim To Profit Taking As Silver Continues To Soar

The past several trading sessions have been incredibly interesting for the prices of gold and silver. After the announcement that the UK voters made the decision to leave the EU, we've seen incredible volatility. In the beginning, both gold and silver skyrocketed on the news. However, more recently, gold has taken a dive while silver has continued to head in the upward direction. Today, we'll talk about why gold fell in value, why silver continues to head upward, and what we can expect to see from both precious metals moving forward.

Why Gold Is Falling In Value

As mentioned above, gold has experienced quite a bit of volatility following the UK vote to leave the European Union. For two days following the vote, we saw massive gains in the price of the precious metal as safe haven investors looked to protect their assets. However, more recently, we've started to see declines. So, what's causing the declines?

According to Forbes, the declines in the price of the precious metal are being caused by profit taking, and it makes sense. When the value of a financial asset soars in value, it's not uncommon to see peaks and valleys as investors look for ways to cash in on their smart choices. After the dramatic gains we saw in gold's price following the Brexit, it makes sense that investors are pulling their profits before moving forward with other moves.

Why Silver Continues To See Price Increases

Silver, like gold, has experienced quite a bit of movement following the UK vote to leave the European Union. However, the movement has been quite a bit different from what we've seen from gold. While both precious metals saw massive price increases following the vote, silver continues to climb. In fact, the precious metal recently broke through it's 21 month high and looks to be on a war path upward. So, what's the difference?

Well, the big difference is that between the two commodities, silver is still fundamentally undervalued. Gold and silver are both safe-haven investments, precious metals, and they are both used in many of the same ways. As a result, the prices of the two metals should actually move in tandem. However, that's not what we've seen over recent years. Recently, gold has outpaced silver in price in a big way.

Considering that for every one ounce of gold that is produced, nine ounces of silver are produced, the price of silver should be sitting at about one-ninth of the price of gold. Clearly, that's not the case at the moment. So, while profit taking is causing gold to decline, investors see much more upside potential in silver and aren't willing to start taking their profits quite yet.

What We Can Expect To See From Gold And Silver Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from both gold and silver. As safe-haven investments, market and economic conditions are creating the perfect storm for growth in their prices. At the moment, there's quite a bit of uncertainty with regard to the global economy. Some of this is caused by the Brexit. However, the global economy has been struggling for some time now. As a result of global economic pain, the stock market is a rough place to be at the moment as well, with uncertainty all over. As a result, I'm expecting to see long run gains in both gold and silver until market and economic conditions improve.