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Private Briefingwith WILLIAM PATALON III, Executive Editor
Today I want to tell you the tale of how the Scottish secession referendum is killing the Japanese yen.
That’s right – the Japanese yen.
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As gold prices plummeted $200 in two days, silver prices fell about 14%, or $4, to below $24 an ounce.
Our Money Morning resources expert Peter Krauth explained the reasons behind gold's fall, so we went back to him to find out the deal with silver prices. Will silver keep falling? Is it a buy at the lower levels?
Here's what Krauth offered for investors.
Money Morning Staff: Peter, are silver prices falling because gold fell, or are there other factors at play here?
Peter Krauth: There are two factors.The first is that silver follows gold rather closely, and usually amplifies its behavior, both up and down. However, it can and does sometimes detach from gold and behave independently, but this is more of a rarity.
The second is silver's industrial demand.
I believe is a factor that I think does affect the silver price in the current environment. Silver does have more industrial uses than gold, so there are some different price drivers.
While silver's industrial demand will help support the price, the recent selloff likely is in sympathy with the lower-than-expected Chinese gross domestic product (GDP) growth which, for the first quarter this year, came in slightly below at 7.7% rather than the expect 8%.
MM: For anyone interested in investing in silver now that the price has fallen to lower levels, what's a better buy: physical silver, or silver-related stocks?
Krauth: I'd recommend both. Buy physical silver to establish a lower risk base position. Then investors can augment that position by buying quality silver stocks that offer considerable leverage to the silver price.
MM: The CME Group, the parent company of the main metals and energy exchanges in the United States, changed on Monday the gold and silver margins by 19% and 18%, respectively. What effect will this have on further gold and silver price movements?
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