1) The decline in the value of the dollar. Gold is not money. It is a commodity. When the value of the dollar declines it takes more dollars to buy the same amount of gold, silver, platinum, oil or any other world commodity.
2) The gold hucksters have artificially inflated the price of gold. If they cannot raise the demand and the prices, they cannot make any money. When they say that Gold has outperformed the stock market for the past 10 years, they fail to mention that this is only because of the market crash in 2008 and 2009. Historically, gold and silver have never outperformed the stock market over a longer period of time. The gold hucksters are also using scare tactics to drive up the prices. They only show you the 10 year trend because it is an anomaly.
3) World tensions. When the world becomes more unstable, people start to hoard precious metals. This is the political part, but it also plays on people's natural instincts. The prices did not start to skyrocket until after 9/11 when America went on the warpath.
Gold and silver prices have crashed many times in the past. If you look at the prices for gold and silver from 1975 through 2000, you would not consider it to be a good investment. In fact, you would have lost considerable money on 1980 gold investments due to inflation and a huge decline in the value of the dollar.
Scroll all the way down to the bottom of this page to see the real historical trend for silver. If you fell for the scare tactics in 1980 and invested heavily in silver at the peak in 1980, you would barely break even in dollar prices today.
Silver Price History
Here is the same data for gold. Scroll all the way to the bottom to see the historic prices. Do you think "Gold is the only investment that always increases in value" as some of the gold hucksters claim?
Gold Price History
The price for silver is currently falling again because people are moving into the stock market, which is also being artificially inflated. When that bubble pops again (it will), investments will move back to gold and silver and those prices will rise again.