Price correlation between silver and gold
Despite silver’s fundamentals being different from those of gold, there is a strong correlation between the price of gold and silver as the two precious metals are traded by the same investors. What gave gold a clear leadership over silver was the 2008 financial crisis. Silver prices followed suit soon with much greater volatility. As long as the two metals continue to be traded predominantly for their monetary value, the correlation is expected to remain intact.
Example of silver trading
Let’s suppose that your technical analysis on the daily chart of silver indicates a high probability for the price of silver to fall. You sell 1 lot (5,000 oz) of XAG/USD at the price of $16.38. This position size equals $50 profit or loss for every 1 cent movement in the price of silver.
Later that day silver is trading at $16.25 and you decide to close your position. The profit made on the trade is calculated as follows: change of price in cents x $50 = 13 x $50 = $650.
Gold and silver may be the most traded precious metals in the metals market, but they are not the only ones. With more and more traders turning towards precious metals, platinum is starting to get the attention of traders as an alternative asset to trade.