STACEY VANEK SMITH: The Federal Reserve meets today to talk monetary policy. The fed is expected to start scaling back some of the extraordinary measures it took during the financial crisis. Speculation over the meeting has pushed the dollar down this morning.
Meanwhile gold has been rising for weeks — and silver has also reached record highs.
Here to talk metals with us is Bob McKee, Chief Economist with Independent Strategy in London. Good morning, Bob.
BOB MCKEE: Good morning.
SMITH: Bob, silver is up 52 percent this year. It’s about $46 a ounce. It seems to have followed kind of the same trajectory that gold has. Is silver just the poor man’s gold?
MCKEE: Well, it has been considered that in the past. There’s a lot of cash out there that big banks and companies are holding. They’re looking to find a better return. But also, gold and silver are seen as a way of protecting the assets and cash that you’ve got from the decline in paper currencies — in particular the dollar.
SMITH: One difference that I have noticed between silver and gold is that silver seems to be a lot more volatile?
MCKEE: Well, silver is a much more speculative market. I mean, gold has a traditional role. First of all as not only a hedge against currencies like the dollar, but also as a cautionary investment against inflation — increased inflation. So gold has that traditional role, and therefore it has a more stable basis to its price. Silver is much more volatile because it’s smaller, and because there’s much more speculation going on in that market.
SMITH: Bob McKee is Chief Economist with Independent Strategy in London. Bob thank you.
MCKEE: Thank you.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.