Precious metals have attracted humans for ages. Gold & Silver are a sign of prosperity and wealth for mankind. Gold and Silver needs widely in their appearance, price, volatility, availability, and uses. In this article, I am trying to point out the differences between Gold and Silver for the investors to decide in which metal to invest. GET YOUR FREE GOLD INVESTMENT KIT
Although both investments in Gold and Silver are considered safe and relatively liquid, some key factors between the two make one more appealing than the other to different investors. If you are planning to invest in Gold or Silver, you should give serious consideration to the following factors.
1.THE Gold –Silver Ratio
The Gold/Silver ratio measures the relative strength of gold to silver prices. Gold and Silver investors use the Gold-Silver Ratio to value these precious metals. The Gold-Silver Ratio compares the price of gold to the price of silver based on the idea that their historical valuations follow predictable returns. When the Gold/silver ratio increases, it means the Gold has become expensive compare to silver and the silver offers better value. The gold/silver ratio was at 125:1 in March 2020 when the Covid pandemic was at its peak. The ratio 125:1 shows that gold was trading at 125 times the value of silver. If the ratio falls, it means gold has become less costly in comparison to silver.
Gold Silver ratio for the last 5 years.
However, the ideal or good gold/silver ratio is often debatable and disagreement among market analysts and traders. Some analyst believes the 20th-century average 47:1 is healthy.
Gold and silver are extremely liquid assets. Investors view them as valuable assets and even some investors view them as an actual currency. Investors can buy physical gold and silver online 24/7/365 from Regal Assets as well as other countless precious metal retailers.
We don’t have to worry about their supply shortages as gold and silver markets are about as liquid as it gets.
However, if I had to give a verdict to one or the other, I would say that gold is more liquid between the two metals due to its greater demand and supply over silver.
Gold definitely has the edge over silver when it comes to storage and transport. You can put many more dollars worth of gold than silver than in the same size of safe or box. For example, as Silver is much cheaper than gold, you can buy many more quantities of silver than gold for $ 5,000/-.
Both gold and silver are called safe-haven investments. However, the levels of risk in these two metals differ.
SILVER IS MORE VOLATILE
Silver experiences higher levels of volatility. Due to its volatility, silver is a riskier investment than gold due to its smaller market, lower market liquidity, and demand fluctuations between its industrial and store value use. Silver will rise more than gold on up days and fall more than gold on down days.
GOLD IS THE MORE STABLE ASSET
Gold is the more stable asset between the two as the fluctuations in the gold price are at a slower rate.
This stability in gold prices adds a level of safety for investors.
Every investor wants growth in their invested money. When one invested in safer assets, the growth is relatively slower compared to equities and other riskier assets.
SILVER HAS MORE GROWTH POTENTIAL THAN GOLD
CHANGES IN THE PRICE OF SILVER PER OUNCE FOR THE LAST FIVE YEARS
GOLD EXPERIENCES SLOWER GROWTH THAN SILVER
Gold is more stable than silver but it comes with a price. The growth of gold is relatively slower. The low volatility slow-moving nature of Gold may result in low profitability.
CHANGES IN PRICE OF GOLD PER OUNCE FOR THE LAST 5 YEARS.
But historical data is never indicative of future performance. The potential for growth for silver is more but the market moves in a mysterious way and growth is never guaranteed. In fact, in the year 2020 gold recorded a growth of 25% whereas silver recorded a growth of 25%.
One of the most important factors is affordability. For example, a person who is building a well-diversified portfolio with $ 1,000/- allocating 10% of his assets to these investments would only allow for $1000 to invest in the precious metals of his choice. Due to the huge price difference between gold & silver, investing in silver may be easier for him.
Lower Prices Make Silver More Accessible
In late April 2021, the price of a toy ounce of silver was around $26.Silver is far more accessible than other precious metals due to its relatively low price. At that price, 10-ounce silver bars cost about $260 each.
Gold Is Far More Expensive
An ounce of Gold was worth Rs. $1,780 in late April 2021. That means one needs a substantial amount of money to make one’s initial investment in gold. Buying smaller quantities increases the overall cost and thus making the gold investment less advantageous.
7.THE FINAL TAKEAWAY
Gold and Silver are great investment options. They have great stores of value and experience growth even during a financial crisis like that of 2008. It is important to maintain balance in your investment portfolio whether you invest in gold, silver, or a mixture of both. My suggestion is “never invest your money blindly even though the stocks/assets are presumed to be safe. Invest in silver if you have a total portfolio value of $30,000, want greater gains, you are risk-tolerant and ready to hold for a long time.
Invest in Gold if you have a larger amount of money to invest, want to hedge against inflation and financial crisis, and want stability in your investment portfolio.
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