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Can Google Trends Predict the Price of Silver?

Gold and silver started a massive bull market in 2001. There are many people who are aware of this. So we thought, what if there is a way to measure the interest in gold and silver? How could you quantify the desire and interest of millions of people?

After attempting to answer that question in a previous post, Can Google Trends Predict the Price of Gold?, the response from our readers was outstanding. So, here is a similar analysis on the price of silver. Look at the following chart.

The Price of Silver January 2004 - March 2010

Here is the search volume on Google Trends during the same period:

Search Volume for "silver price"

As you can see, the search volume has gone up by about 50% since 2007, but it doesn’t seem to be very well correlated the price of gold. So, here is another Google Trends chart for “buy silver”.

Search Volume for "buy Silver"

Here we see a similar pattern to the search volume for “silver price”, but without the large spikes. In this case there is an increase of about 50% from 2007 to 2010.

So, after checking various search terms, I did not find any good predictors for the price of silver. One reason for this may be that the public interest in silver is much lower than in gold.  Comparing the search volume, gold is 2-3 times as popular as silver.

Also, silver is not nearly as popular an investment as gold. So, perhaps most of the people who are searching for silver are not interested in buying it, while many of the people searching for gold keywords are interested in investing in it.

So far, Google Trends was not very useful in predicting the future price of silver. However, Trends is just one source of such Collective Intelligence, and it seems clear that there are better sources that will be more useful.

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  1. March 26th, 2010 at 19:29 | #1

    Interesting idea George. I’ve just blogged about the same thing that I’ve called Behavioral Analysis Trading. I was examining the forex market specifically, and noticing and using the hot trends topics on google trends. It gives a nice snapshot about what others are thinking. Read more about it here:

    http://becomingcapitalist.blogspot.com/2010/03/behavioral-analysis-trading.html

  2. March 26th, 2010 at 20:01 | #2

    @Nick

    Thanks for your comment. I am sure we are not the only ones who have thought of it! I wonder how many people have created successful systems from this kind of idea.

    By the way, love the byline for your blog: “A transition from mind slave to free enterprise”.

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