Gold vs. Silver: What’s a Better Investment?

Throughout the years, investors have recognized precious metals, including gold and silver, as valuable assets. They hold a high economic value simply because of their scarcity and the difficulty in obtaining them. Only a few of these metals are mined each year.

The price of gold or silver, however, can go up and down beyond reasons you can’t control. Hence, precious metals should be handled as a long-term investment instead of a trading tool.

While there are still a dozen or so different kinds of metals, silver and gold are the primary targets of investors. But between the two metals, which is a better investment?

The Price of Silver and Gold

The first thing that you have to consider when purchasing metals as an investment is their relative price. Silver is a more affordable option compared to gold.

Historically, the spot price of gold can go up to a few thousand dollars compared to the price of silver, which is just less than thirty to twenty dollars.

Of course, not everyone would have a few thousand dollars lying around to buy gold. Some people may find silver as the only feasible way of investing in precious metals.

The Demand for Silver and Gold 

Both metals have different uses other than investment purposes. They are used in commercial, industrial, as well as consumer needs.

Every year, the above-ground stock and demand for silver are more than that for the gold. Silver is a key component in several different items from electronics, photography, medals, and even coins.

Gold, on the contrary, has limited industrial uses in electronics, coins, and jewelry. But with higher demand, shouldn’t silver be more expensive than gold? Again, the scarcity of an item plays a role in the value of the metal.

That is why even if silver is more in demand, gold is still more expensive due to the limited above-ground supply.

The Volatility of Prices

The price of all precious metals is subject to volatility, which is why you need to be ready when you invest in either of the two.

The price of silver, however, is more volatile compared to the price of gold. This can be a good thing as well as a bad thing.

With higher volatility, the price of silver can increase more in bull markets and decrease more in bear markets. As an investor, you need to have the best timing when selling silver.

Gold/Silver Ratio

The gold/silver ratio provides investors insight into the performance of the two metals against each other. The ratio measures how much silver you can buy with one gold.

It’s a great way to see if one is undervalued compared to the other. But over the last 10 years, the gold/silver ratio has always been in favor of gold.

Storage and Transportation

Gold is much denser and more expensive compared to silver. This means that you would be storing more dollars in a same-sized shipping package or safe with gold than silver.

The Final Verdict

After considering everything mentioned above, gold is a better investment than silver ounce-per-ounce. But investors can also get a better deal when they consider the volatility of silver in the bull market.

Whether you choose to invest in gold, silver, or both, keep in mind that precious metal investments should be approached with caution.

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