Gold And Silver Are Rising.

In my opinion, which is probably worth not much, this is a reflection of fear in world economic markets. Should the stock market begin to rise again, PM will generally begin to fall again. However, I believe the equities have further to drop, possibly another 5% or so. Personally, I hope gold does drop, as I am finally able to buy some, but I will wait for a drop in price.

It's a negative economic indicator.

I don't think it would be wise to characterize the economic situation based on a week's worth of price movement in precious metals. There could be a host of other reasons for the move that have nothing to do with the economy.

With that said, gold does have a tendency of performing well during periods of economic uncertainty. There are monetary and opportunity costs to holding gold since it doesn't produce any net positive cash flow until the moment you sell it. So it usually only gets bought up when the alternatives are bad. In recent months, risky assets like stocks and corporate bonds have not done so well. If history is any guide, gold performed well during the 1930's, 1970's, and 2000's all of which were relatively poor periods economically. Gold performed poorly during the 1990's which was a relatively good period.

Silver is trickier because it usually likes to follow its big sister but almost 56% of the demand comes from industrial applications whereas its closer to 7-8% for gold. Silver's correlation with gold can put it at odds with it's industrial demand. So, I guess it will depend on which one of these forces is stronger.

I believe that oil prices can cause other part of the industries to be effected, other may disagree, it is this unbalance that have some investors decided to park their money mostly in gold.

If and when oil prices stabilize, I think price of gold and other precious metal to drop again.

Now it's back down...