If you've been following the news and markets lately, you've likely noticed that gold and silver are hot right now. These precious metals have been performing well lately, but really, their growth has been pretty constant for many years. Gold and silver are both highly coveted in all parts of the world and have been used as the basis for different economies in various countries.
The consistent demand of gold and silver combined with the fact that both metals are rare and in limited supply makes it likely that their value will continue to grow. You may be looking to begin investing in gold or silver to begin taking advantage of their powerful investments.
But you may be wondering whether gold or silver is the best investment? Should you buy all gold, all silver, or a mix of both? These are all good questions! In the next few sections, we'll share some more information about investing in gold and silver and how the two precious metals compare to help you determine whether one if the better investment choice for you.
Advantages of Investing in Gold
There are many advantages associated with investing in gold. These advantages make gold a top choice for many investors looking to purchase precious metals or add precious metals to an IRA.
Less Volatile than Silver
Historically, gold has seen a more stable rate of growth than silver. Since there is more silver on the Earth than gold, the price of silver often decreases when more mines are opened. This leads to the price of silver fluctuating a lot more than gold, which can be frustrating as an investor.
Easy to Store
While you may think gold and silver would both be easy to store due to how small a gold or silver coin or bar is, the reality is that gold will be much easier to store. This is simply because it is worth so much more than silver, so if invest the same amount of money into gold and silver, you'll have a significantly greater volume of silver coins and bars to store.
This can make storing silver more costly if rent segregated storage or a safe deposit box at a bank. If you choose to store your precious metals in your own home, you may find that you quickly run out of storage for silver pieces. Since gold is more value-dense than silver, it won't take up nearly as much space.
Can Hedge Against Other Decreases in a Portfolio
Due to its stability, gold can also offer protection against market volatility or unexpected drops in the economy. Gold tends to hold its value, and even increase, when the economy takes a downturn. Silver can also offer some protection against hard economic times, but due to the volatility of silver, gold is a better choice for this factor.
Very Easy to Liquidate
When you want to liquidate your gold, you'll find that it is very easy to find a buyer. This is due to a number of factors, including the high demand for gold and the fact that it has proven to be a more stable investment. While silver is still relatively easy to liquidate, it may be a bit more difficult to find a buyer due to the greater volatility in its value.
Disadvantages of Investing in Gold
While there are many benefits associated with investing in gold, there are still a few disadvantages to be aware of as well. However, the advantages often outweigh the disadvantages in the eyes of many investors.
Takes a Longer Time to See Big Gains
If you're looking for a "get rich quick" solution, investing in gold probably isn't for you. In most cases, its value tends to rise more slowly, so it may take some time for your investment to really grow enough to give you the profit margin you're looking for. This makes it a good choice for those saving for retirement, but not as good for investors looking for riskier options with a high potential for quick growth.
Easy to Damage
Gold is very soft. It requires special care and proper storage to prevent it from being damaged. And, if you nick or scratch a gold coin or bar, it could adversely affect its value. If you do purchase gold, be careful to store it properly and handle it very carefully to prevent it from being damaged.
Silver, on the other hand, is much stronger and more durable. It is less likely to be damaged or scratched with normal handling.
Expensive
An ounce of gold is significantly more expensive than an ounce of silver. For some individuals, the high price of gold means they simply can't afford to invest in it at all or may only be able to purchase a few pieces. Since silver is much cheaper, individuals who don't have too much money to invest can still purchase a good number of silver coins and bars.
Advantages of Investing in Silver
Now, let's take a look at the advantages of investing in silver. Many investors also find silver to be a very lucrative investment and may choose it over, or in addition to, gold.
More Changes to Make Large Gains More Quickly
As we mentioned above, one of the disadvantages of investing in gold is that it can take a long time to see growth in your investment. Silver's value, on the other hand, changes much more rapidly. It is possible to invest some money in silver and see a substantial increase after only a few months, or even weeks.
Now, of course, on the flip side of this, since silver is more volatile, it is also possible to invest money and have the total value of your investment decrease after a short period of time. But silver is still a better choice for speculators who want to play the market and try to make fast money.
Easier to Afford
Many individuals simply can't afford to invest in gold. Or, at best, they may only be able to purchase a handful of coins or bars simply because 1 ounce of gold is so expensive. Silver is a much more affordable investment.
You can purchase many more silver coins or bars if you don't have a large sum of money to invest. So, if you're looking to hold more than just a few coins or bars in your portfolio, silver may be the best option for you.
More Durable
Silver is also much stronger than gold. While a gold coin or bar could be easily damaged, silver will not get damaged so easily. This can protect your investment, since a scratch or nick on a coin could adversely affect its value.
Disadvantages of Investing in Silver
Silver does have a few disadvantages to consider as well. Read on to learn more about these disadvantages to help you decide if it is the right precious metal for you to invest in.
Not As Easy to Liquidate
You probably won't have a lot of trouble finding a buyer for silver, but it won't be as easy as finding a buyer for gold. Additionally, when you try to sell silver, you are likely to be quoted different amounts from different sellers, which will require more research on your part to find the best buyer.
There is typically less variation between the prices you'll be quoted if you're looking to sell gold. This can mean less work for you when you're ready to liquidate your investment.
More Volatile Than Gold
Finally, the price of silver is much more volatile than gold, making it a riskier investment. While you might be able to 'get rich quick,' it is also possible that the value of the silver you purchased will quickly decrease.
If you want to do well investing in silver, you'll need to learn what to look for in the market and the news to help you identify the ideal times to buy or sell. This can be quite time-consuming and isn't as essential when you invest in gold.
Which Precious Metal is Right for You?
Clearly, there are advantages and disadvantages to investing in gold and silver. Choosing the precious metals you want to invest in is really a personal decision. Use the pros and cons we outlined above to help you decide whether gold or silver feels like the best fit for your investment needs.
The other important thing to keep in mind is that it doesn't have to be all or nothing. There is no rule stating that you can't invest in both gold and silver. In fact, nearly all places that sell gold also offer silver, so you'll even be able to invest in both precious metals at the same time.
Gold and silver can also both be held in an IRA. As long as gold coins and bars are at least 99.5% pure and silver coins and bars are at least 99.9% pure, you can add them to your Precious Metals IRA.
Investing in both gold and silver also offers the added benefit of diversifying your portfolio even more. One of the reasons many individuals consider investing in precious metals in the first place is to diversify their portfolio and make them less dependent on the stock market. When you invest in both gold and silver, your portfolio will be even more diversified to keep you from being horribly impacted should one of your assets see a large decrease in value.
Making a Decision
Now that you've read through the advantages and disadvantages of investing in gold and silver, it is time for you to make a final decision: do you want to invest in only gold, would you like to invest in only silver, or do you wish to hold a mix of both precious metals in your account? Use the information we shared above to help you make the best decision for you!
Frequently Asked Questions
Silver and gold can both be good investments. There are, however, pros and cons to weigh for each precious metal. Gold typically offers more stable growth, is easier to liquidate, can help hedge your portfolio and protect against other losses, and is easier to store. Silver, on the other hand, offers better prospects for individuals looking to make quick gains and is much more affordable to allow investors to add multiple coins or bars to their holdings.
There are different factors that can cause the value of gold and silver to move. Keep in mind that silver is more volatile than gold, so its price is more likely to jump or fall more.
When the stock market is over performing, the value of silver and gold are typically lower. However, when the market and economy are not doing well, these precious metals tend to rise in value. This is because they become more desirable than investing in the stock market during these times of economic trouble.
Inflation can play a huge role in the price of gold. Since the blue of gold is not tied to any one currency, investors often look to add gold to their portfolio to hedge against inflation.
The value of silver can increase or decrease depending on the industrial demand for this precious metal. Silver is used in many different industries for manufacturing items such as solar panels, electrical devices, and even contact lenses. An increase in production demand for the items that use silver can drive its value higher, while a decrease in demand can cause the value of silver to fall.
Yes, if you're paying for precious metals storage, you'll be able to store a larger value of gold in a much smaller space than the same value of silver. This is because gold is more value-dense, and one gold coin is worth as much as over 50 silver coins. If you invest a lot of money in silver, you'll end up with a lot of coins and bars, which will require more storage space.
Even if you plan on storing your precious metals at home, it is important to think about where you plan to store them and how much available space you'll have. If you have limited space, you may find that gold offers a more practical solution.
Yes, if you open a Precious Metals IRA, sometimes called a Gold IRA or Silver IRA, you will be able to hold a mix of gold and silver coins and bars. While the terms Gold IRA and Silver IRA may give the impression that you need to choose one or the other to invest in, they both really refer to a Precious Metals IRA where you can hold gold or silver (or platinum or palladium as well).
The value of silver may increase. There is a lot of demand for it as it is being used more and more in various industries. However, since new silver mines are discovered more frequently than gold mines, the price of silver may decrease with greater supply.
It can be challenging to predict whether the price of silver will increase or decrease since it can be quite volatile.
While both gold and silver are rare, gold is far rarer. In fact, there is likely 19 times as much silver than gold. This includes what has already been mined and what is likely still within the Earth's crust.