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Gold and silver remain two of the most popular precious metals. Bullion investors love the duo due to their value, utility in a range of commercial and industrial functions, and the ease of buying and selling coins, bars, and rounds. Collectors also prize gold and silver due to their beauty, especially when mints use each metal to craft often-stunning currency pieces.
While gold’s high price has given the metal extensive headlines, some investors prefer silver due to its lower cost of entry and potential for substantial price swings.
Many online websites, like SilverCoin.com, sell both gold and silver bullion to enthusiastic investors and collectors. Physical bullion is offered through coins, rounds, and bars. Coins often hold great collectible value as they are created by governmental mints, while rounds and bars can present more affordable investment opportunities.
As alternative assets become more popular, many wonder if there is an advantage of investing in gold rather than silver, or vice versa. While the spot prices of both are often drastically different, both gold and silver are attractive investments for bullion stackers for various reasons.
Keep reading to learn more about the advantages of investing in gold vs. silver and learn which metal might be the better choice.
Gold’s Limited Supply Makes it The Hedge Of Choice
Gold and silver often move in the same direction. Both usually rise in value during economic uncertainty. However, the limited supply of gold gives the metal strong price continuity. The gold-to-silver ratio tells investors how many silver ounces they would need to purchase an ounce of gold.
The average gold-to-silver ratio has hovered around 60-to-1 across the 21st century. Back in mid-March 2020, the ratio hit a peak of 123.78, the highest level in more than 5,000 years. Interestingly, researchers have been able to collect data dating back thousands of years concerning the gold-to-silver ratio. The ratio was about 2.5x during Pharaoh Menes time (around 3100 BCE). It jumped to 6x during the time of King Hammurabi (about 1750 BCE). Emperor Constantine 1 (280-337 CE) used a 10.5x ratio.
Silver’s large industrial uses enhance gold’s limited supply. Commonly used in the automotive, medical, and manufacturing industries, demand for silver often rises and falls at a more volatile rate than gold. If the economy is slow and industry takes a tumble – silver will often slide. Gold is used far less in industrial settings, giving the metal better price stability. This makes it a better investment for those interested in hedging their portfolios and diversifying assets.
Silver’s Affordability Makes it an Enticing Future Asset
Investors who purchase physical silver bullion hold a hard asset with no counterparty risk and one that offers privacy and confidentiality. Silver’s smaller spot price means investors can purchase more bullion and avoid paying the high premiums often experienced when buying small denominations of gold (from a half-ounce to one-twentieth of an ounce).
Silver’s current affordability in relation to gold becomes enticing when considering the steadily declining stockpiles of silver. While about 27,000 tons of silver were mined in 2019 (compared to roughly 3,300 tons of gold), global government silver inventories have sharply downturned since 1970.
Central banks across the world continue to purchase gold, but governments would largely be unable to meet the needs if global supply chains require more silver. As a result, large purchases of silver (especially by governments) would spike demand and positively benefit the price.
While this scenario is not guaranteed – silver remains an affordable asset compared to gold with several avenues for potential large price growth.
Gold vs. Silver – Which One is the Better Investment?
Choosing between gold and silver comes down to personal preference. Some prefer gold’s high price point as a sign of status and stability in a complicated financial world. Others would rather bet on silver’s volatile nature and purchase more bullion to reap strong returns if the price spikes.
Storage also plays a role in investment choices, as a person would most likely have to purchase a few dozen ounces of silver to equate the financial value of one ounce of gold.
Both gold and silver bullion are easy to buy, sell, and trade, are valued across the world, and can be exciting to collect due to the diversity in designs with some silver coins and bars. Either make a strong investing choice once consumers understand the dynamics behind each metal.