precious metals

Is Silver A Better Investment Than Gold?

Gold and silver are some of the safest and most stable investments in times of a poor economic outlook or political turmoil.

General fear of market crash in periods of uncertainty with increased market volatility leads to a surge in demand for these precious metals. Although gold often gets all the glory for alternative investments, you shouldn’t be quick to disregard silver.

Silver Is Cheaper With Potential For Higher Returns Than Gold

As silver costs less than gold, it’s more affordable to the average investor. For the same amount of money, you can buy more silver than gold. That’s because gold is rarer, less mined metal. Although less popular than gold and silver, platinum coins and bars are another sound investment you can consider. You can check them out here. But if precious metal investing is new to you and you don’t have a lot of money to start with, silver may be the best precious metal to begin investing in.

In the 21st century, the spot price for silver has never exceeded US$50 an ounce, whereas gold trades in four figures. Generally, silver is worth around 1/80th the price of gold and has a potential for higher returns when the price of silver goes up.

Silver is also known to perform better on so-called bull markets–where financial conditions allow for prices to rise or when prices are expected to rise. A famous example is in the 70s when the price of silver rose 3,800% compared to a 2,500 % rise for gold.

If still unsure whether you should invest in physical silver, consider the benefits and similarities that silver shares with gold, but at a much lower cost:

  • Like gold, silver is a tangible, hard asset that can’t be hacked.
  • Silver is a currency, just like gold.
  • When you hold physical silver, there’s no risk of not meeting the financial obligations.
  • There’s no default risk with owning physical silver, unlike the majority of other investments.
  • Owning physical silver offers privacy and confidentiality, although you have to report any gain on your income tax return.

An excellent place where you can start your search and see what gold, silver, and other precious metal investing options are available is Oxford Gold Group.

gold versus silver

Silver Is Scarce And Its Industrial Use Is Rising

The above-ground availability of silver has immensely declined. Only a century ago, silver was available at 2.2 billion ounces and, today, at less than 300 million ounces.

The massive use of silver in a wide range of industries and scarcity make it an indispensable metal. Silver is expected to gain more value with time and, therefore, is a viable long-term investment option.

Here are some industrial applications of silver that makes it an important and a much-needed precious metal:

  • Still-photography used in x-rays
  • Applications in the photovoltaic or solar energy industry
  • Nanotechnology
  • Medicine
  • Electronics
  • Eating utensils
  • Water filters
  • Dentistry components
  • Soldering pipelines
  • Antifreeze
  • Jewelry
  • Mirrors
  • Glass
  • Automobile engines
  • Industrial chemicals
  • Plastics

Economic growth affects silver prices more than gold prices. With mining yields in decline, the cost to find and extract silver is on the rise. Also, the inability to mine and produce silver at a current or higher rate causes a decline in silver availability. This ultimately leads to the rise in the price of silver.

Gold And Silver Differences To Consider When Investing

Before you decide on the type of precious metal investment to help you build wealth, consider these five most distinctive differences that matter the most when investing in gold or silver:

  • Volatility

Gold is less volatile than silver. Also, gold will fall less in bear markets and rise less in bull markets. On the contrary, silver will fall more in bear markets and grow more in bull markets than gold. Selling silver after significant run-ups is critical to having an investment success.

  • Affordability

At current prices, one ounce of gold costs 80 times more than one ounce of silver. You can also buy denominations smaller than one ounce, but they come with higher premiums. Silver, on the other hand, is more affordable and it allows to meet small financial needs. Silver is more suitable for gift-giving, too.

  • Storage

Gold requires less storage space and it won’t tarnish. Silver is more expensive to keep–with up to 128 times more storage space needed than gold–and it’ll tarnish over time.

  • Industry

Gold comprises only 12% of global industrial demand, whereas silver comprises 56% of total industry demand. The industry has little impact on gold prices as people invest in gold when the economy is poor. Economic and industry slowdown can impact silver prices and cause them to fall.

  • Stockpiles

Central banks invest and hold a significant amount of gold. In contrast, governments have a very small stockpile of silver.

Other Precious Metals Worth Investing In

Although most popular, silver and gold aren’t the only precious metals worth investing in. You can consider investing in other metals, such as the following:

  • Platinum

Platinum often achieves a higher price than gold as it’s rarer and far less excavated from the ground annually. Industrial use in the auto industry and jewelry, as well as the fact that it’s online mined in two countries–South Africa and Russia–determine platinum’s price.

  • Palladium

Palladium is the least known precious metal with uses in manufacturing processes, medicine, dentistry, groundwater treatment, medicine, and chemical applications. The majority of this precious metal supply comes from mines located in Russia, United States, Canada, and South Africa.

When palladium is mixed with yellow gold, the alloy creates a stronger metal than white gold. This metal is also more durable than platinum. Because it serves as a great catalyst, thanks to its ability to speed up chemical reactions, palladium’s most extensive industrial use are in catalytic converters.

Conclusion

Investing in silver, gold, and other precious metals is a valuable hedge against economic and political instability. Given the amount of money you have available to invest and the type of investor you are, precious metals can help you supercharge and diversify your existing portfolio.