Investing in Gold Versus Silver
Metals in general are considered good investments, in large part because they are limited resources.
Once they’re gone, they’re gone.
This means that they will only rise in price, so buying them when we can is part of a sound investment strategy. They are also generally very good hedges in volatile bearish markets.
But not all metals are created equally. When people think of precious metals, they tend to think of gold and silver, probably because they are the most commonly used metals in jewelry, coinage, dentistry, and more.
If you’re wondering whether gold or silver is a better investment, keep reading to learn more.
Gold is more expensive than silver
While both prices fluctuate and, therefore, this ratio does too, gold generally costs 60 to 100 times more than silver.
This makes it more valuable and, therefore, more attractive to many investors.
The gold market is also significantly larger than the silver market, with a much higher trading volume.
Silver is more closely linked to the global economy.
More than half the world’s silver goes to technology and other industrial use, which means that when industry is up, silver is also up.
This isn’t necessarily a bad thing, of course, but silver is not nearly the hedge that gold is.
Silver is more volatile than gold.
The worldwide market for silver is much smaller than that of gold, which means that it fluctuates faster and harder.
Gold has always been stable and rising over the very long-term, but the same cannot be said for silver.
Gold is rarer than silver.
As stated above, one of the reasons why precious metals are attractive investments is because there is no way to make more when the Earth’s supply is exhausted.
This is, of course, true for both gold and silver; however, the total amount of gold mined every year is about 120 million ounces and the total amount of silver mined is nearly one billion ounces.
If rarity is desirable – and it usually is – gold is and always will be rarer than silver.
Silver takes up more room than gold.
One thousand dollars’ worth of silver will take up 128 times as much space as $1000 worth of gold. An individual investor may not consider this a concern, since most individuals will not be buying so much silver that they can’t store it.
But on an institutional level, this is definitely a consideration since the costs for storing and transporting silver are considerably higher than those of gold, so overhead is going to be relatively higher.
Silver also tarnishes and gold doesn’t, which can impact maintenance and overhead costs as well.
Gold is prettier than silver.
This is, of course, a matter of personal opinion; however, most people do prefer the look and feel of gold to the look and feel of silver.
This matters when one of the primary demands on precious metals is the jewelry industry. It also matters for individual investors who are looking for something tangible that they can collect, admire, and/or display.