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

Precious metals such as silver and gold have always been a simple and lucrative way of enhancing and diversifying your investment portfolio.

The key to their benefits as an investment lies in their stability over time compared to currency, stocks, and mutual funds. However, choosing whether to invest in gold or silver isn’t an easy decision.

Both have advantages to certain types of investors, and in many cases, purchasing both can provide residual benefits. Before you make investments in gold and silver, find out which option is a better investment to help you build wealth.

Precious Metals Affordability

Silver is far more affordable than gold as both a physical investment or as an ETF (exchange-traded fund). In typical market conditions, silver is 90 times cheaper, making it accessible to investors with a limited budget. Purchasing physical silver is also advantageous, as it doesn’t have the same premiums to buy or discounts to sell, regardless of the quantity involved.

While gold is more expensive, the market for it is far more lucrative due to liquidity. Because of its use as a major investment and the jewelry market, gold is easy to buy and sell, counteracting its lack of affordability compared to silver.

Volatility of Gold Vs Silver

The annual supply of silver is around 1 billion ounces compared to 120 million ounces for gold. At a glance, this would make silver seem like a less volatile investment.

However, the substantially lower price for silver compared to gold means that a small amount of money can have an adverse effect on the silver market. For gold to fluctuate, a far greater capital investment is required. Therefore, for the sake of stability, gold is a better option, especially if it maintains or increases in value.

The industrial uses of each metal also play a pivotal role in volatility. While only a small amount of gold goes to industrial applications, a majority of silver is used in everything from electronics to batteries to solar panels.

As a result, demand for silver — and consequently, its price — can rise dramatically during a strong economy, but falter during a recession. Gold is far more steady during deflationary periods of rapid economic growth, giving investors a steady or decent return.

ETFs vs. Bullion

You can purchase gold and silver either as physical bullion (bars or coins) or as an exchange-traded fund.

Both options hold advantages and disadvantages. If you can find a buy-and-store broker, purchasing bullion allows you to own an asset outside the realm of a bank of a fiduciary institution.

You won’t have physical possession of the precious metals, but you can request them in times of emergency.

A silver or gold bullion ETF is a more convenient option, but when you purchase an ETF, you don’t actually own the gold or silver.

Instead, you’re investing in a fund owned by a third-party company. Therefore, you can’t take possession of the metal if necessary, but you also don’t have to find a trustworthy broker to facilitate a deal.

When you analyze gold and silver investments, both have distinct benefits. The key to success in this market is to diversify in both gold and silver while buying low and selling high.

With due diligence and some educated decisions, you can turn gold and silver into an investment that builds wealth and reaps benefits for years to come.

At London Coin Galleries in Newport Beach CA, we’ve helped investors, estates, sellers, buyers, and collectors.

We offer a wide range of options and selections of bars, coins, currency, fossils, minerals and much more.  Whether you want to buy or sell gold and silver, contact us to schedule an appointment where we can discuss all the options available so you can make an informed decision.

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