An Empirical Analysis on the Relationship between Gold and Silver with Special Reference to the National Level Commodity Exchanges, India

Abstract

This empirical study mainly examines the relationship between gold and silver over the 2001-2013 periods. This period covers a very extensive range of economic conditions, political change in major producers and increased sophistication in asset markets generally. It includes, at the start of the period, the attempted cornering of the silver market only. Thus, prime fact is that one would not expect to necessarily see a stable relationship between gold and silver. Gold and silver have historically been seen as close substitutes for one another, both being precious metals that can be used to back currency and both having been used as currency. There is significant evidence that these metals can play a useful role in diversifying risk, as well as being an attractive investment in their own right, thus, one might expect that the prices share similar dynamics. However, there are also economic fundamentals that may act to drive the prices of gold and silver apart. The main objective is to study about the relationship between gold and silver in commodity market. The secondary objectives are to study different factors affecting the gold & silver price & to find out how price of gold & silver fluctuate in the Indian commodity market. After effective research it’s found that there is significant relationship between gold & silver. The tools used are correlation, regression & ANOVA. The study will help investors to know the relationship and influence of factor over the price of the gold and silver. This study also may be taken as a guide to investors who will invest in gold or silver.