Gold vs. Silver Precious Metals: Compare Key Bullion Investments
While both precious metals are great buys, gold vs silver both have their own unique benefits and downsides.
Gold is not as hot as you may think it is. And silver may not be as weak as you think it is. When thinking of investing between these two beneficial precious metals, both metals may not be as clear-cut as you’d like, or as you’d think.
Keep the following discussion in mind:
Considering the Metal Silver vs. Gold at a Glance
Supreme Storage Capabilities
When looking for a metal that holds more value while not taking up as much space, gold wins over silver every time. Larger investments win with gold.
Popularity in Gold
Gold has always been the bigger brother of silver when you are talking about the two metals. It is purchased by many central banks and billionaires.
Bottom Line: A solid long-term investment for all investors.
Lower Spot Prices
Generally, if you are spending under $1,500 you will see yourself getting more for your purchase compared to gold. Silver has a lower premium over spot if you are investing under $1,500.
Greater Industrial Use
Silver has more uses for industrial purposes. This gives silver practical uses other than just investing. This increases the demand for silver compared to gold. However, some analysts say this will slow down in the years to come.
Bottom Line: Great choice for investors considering smaller purchases from bullion dealers.
Gold is Subject to Paper Speculation
In an ideal world, all global commodities would rise and fall in value based on supply and demand. However, shown by the sad experience of countries like the Philippines and Caribbean nations that were dependent on sugar in the 1970s and 1980s. Even if the supply is low, the value can be depressed artificially due to the fact that there is a lot of paper speculations over commodities. Their future prices don’t normally correlate with their underlying rarity.
This is playing out with gold with some speculating a gold bubble. Gold is subject to a lot of paper speculations from investors, and it’s depressing the price of gold. Silver, on the other hand, isn’t subject to this threat. Keep this in mind when trying to decide the value between these two metals.
The future value of both great metals is impacted by the number of speculations in these precious metals and the factors raised above.
Gold's Historical Role
In fact, throughout human history, anything of value, whether they are religious icons, religious objects, imperial riches, kingly wealth, had gold related. In fact, a lot of the money of the ancient world was measured in terms of gold coins and content. Gold is the number-one historical store of value.
Is Silver Rarer Than Gold?
Let’s get this out of the way now, gold will always be worth more than silver. That’s the bottom line. The times are rare in history when the value of silver per troy ounce exceeded the value of gold per troy ounce. It’s extremely rare.
In fact, it may not even be existent. Gold will always be worth more than silver. This should not be a surprise. Why? When people think of value and valuable metals, the first thing that most people come up with is gold. People just gravitate towards gold, whether that be jewelry, industrial goods, or industrial raw materials. This should not be a surprise.
If you are looking to diversify your investment portfolio by buying gold metals or precious metals components, keep track of the disparity between these metals and consider the gold/silver ratio. There may be opportunities where it makes a lot more sense to invest in silver rather than gold.
The price differential can be very fluid. It is impacted by the amount of silver being mined, political issues, and the general state of the global economy.
The Rarity of Gold and Silver
When it comes to rarity, gold is a rarer metal compared to silver. However, this does not discount the fact that silver has a lower spot price compared to gold.
Moreover, another key aspect of price ratios is the fact that certain cultures like India, for example, price silver the same goes with Taiwan and China.
While gold will always be worth more than silver on an absolute basis, the disparity between them can shrink due to higher silver demand. Keep this in mind when trying to determine the investment opportunities of the disparity of both of these metals.
It’s not as straight forward as you think. It’s not a slam dunk if you invest in gold because if you invest in gold, you’re joining millions of other people the world over that invest in gold. Whereas if you pay attention to price fluctuations, you might position yourself in such a way that you could make large short-term gains with silver.
Industrial Consumption of Silver is Going Up in the Market
One of the biggest drivers in the silver price increasing in recent years is the fact that there are more industrial goods made out of the metal. Silver is actually used in a lot of industrial processes.
We’re either talking about electronic parts, or we’re talking about industrial processes that use silver as a component. Industry consumes it. This type of industrial consumption of silver is going up, and this impacts the price disparity of gold to silver.
The spread between these two metals can get quite tight as industrial consumption tends to push the silver market prices up.
Silver Availability is Predicted to Be Tighter
Since gold has historically been such a crowd-pleaser, companies from Australia to South Africa to all points in between have gone out of their way to invest in gold mining stocks vs physical bullion.
All these gold mining companies are just in a mad rush to scoop up as many resources out of the Earth as possible. This has of course increased the volume in market circulation and the overall supply of gold in the market. Basic economics kicks in, when supply goes up and demands remain fairly stable, the market value goes down. This should not be a surprise.
Silver’s availability due to the fact that it’s often neglected compared to gold is predicted to get tighter with each passing year. In fact, there are few dedicated silver mines. By dedicated mines, we’re talking about mines that are dedicated purely to mining silver.
This is a key fact to keep in mind when determining the disparity between gold as well as silver. Silver is often mined with copper and zinc or lead. Companies would open copper mines or zinc and lead mines and as a by-product, they would mine silver.
Whenever you have a precious metal as an afterthought, the overall supply of that metal tends to be lower than if you are just focusing on getting it out of the ground. This should be a key driver in determining the disparity of gold and silver in the near future.
The Results Are In: The Best Metal to Invest
Silver is definitely the metal to invest in if you are making a small purchase like silver coins while gold is the choice for larger and long-term secure investments for diversification. Consider rolling gold into your IRA. Remember to diversify your portfolio when choosing purchases and consult a specialist.