You have finally decided to buy precious metals for investment. And among the four best choices, you are stuck between gold and silver. You ask yourself what difference it makes if you buy one instead of the other. There are technically 5 distinctions to know on which to invest. Being aware of this can help your investment portfolio.
The silver price is more volatile
Each year, the total silver supply is about 1 billion ounces. On the other hand, gold has an annual stock of 120 million ounces. By simply looking at these figures, it is easy to think that the silver market is bigger than the gold. In reality, however, silver has a lower price compared to gold. This actually makes the value of silver’s annual offering lower than gold.
Silver is more volatile compared to gold because a small amount of money can have a greater impact on the price. On the days when silver rises high, it rises more than gold and consequently falls more than gold during its downward days.
If you decide to invest in silver, you need to be emotionally prepared for the high volatility of silver in the market. Selling silver requires better tactics compared to selling it in the first big drop. But do not worry about the volatility of silver. Silver will perform better than gold in bull markets. It sells better than gold, so if the bull market peaks, sell the silver!
Silver is more affordable
how so? Silver shares many similarities with gold. Buying material silver is just like buying physical gold. It is a hard asset, unlike digital trading, paper profits and cryptocurrencies. Like gold, silver cannot be mined. On top of that, silver is money. Unlike paper money, individuals cannot simply create out of nothing silver. It can therefore not depreciate. History even proves that coins use silver more frequently than gold.
People invest in silver because they have an advantage: they get the benefit of gold at a cheaper price because of its many similarities. This is why people call silver the “poor man’s gold”. If your current status is not that high yet, silver may be your option before comparing it to gold. Because of its affordability, the metal can help you maintain your standard of living.
When it comes to buying, it can be harder for you to give away gold. In the same way, silver makes it more practical for smaller purchases. Some people use gold for the bigger buy like a house. But silver will be enough for smaller ones, such as groceries. As an investor, you also find it cheaper to give silver as a gift compared to gold (unless the recipient is really special to you). It is only logical that investors should have silver for these reasons.
Silver needs a lot more storage space
On the other side of the coin, the price is affordable. For the same purchase between silver and gold, you will of course have more of the former compared to the latter. On top of that, most silver is actually denser than gold. It has a volume that is 84% larger. By comparison, a purchase of $ 50,000 gold fits in your hand, while you need 10 large shoeboxes to hold the same amount of silver. So to speak, you need more storage space if you want to buy silver, and you will end up paying more for its storage. GoldSilver, for example, charges 0.385% for gold per month and 0.485% for silver.
Finally, pure gold is not affected, while silver eventually does. Keeping silver requires better storage conditions: store it in a dry place without exposure to the elements. Gold does not need it.
Silver has higher industrial use
Compared to gold, 56% of the silver stock goes to industrial uses. On the other hand, the industry uses only 12% of the gold stock. We may not see it directly, but most products we use daily contain silver. Mike Maloney shares in his book that silver is the most important material out of all the elements. This metal conducts most electricity and is thermally conductive and reflective. We see it in electronics, batteries, solar panels and even in medical applications.
It is important to note that the status of the world economy influences the demand for silver over gold. Therefore, silver is actually more susceptible to whatever economic boom is taking place.
Silver stocks fall, gold rises
Investors may not see this directly. But if we look at how silver usage is managed, it becomes a relevant distinction.
In the past, governments used silver more than gold as coins. But as technology advanced, coins no longer used the precious metal. However, a twin effect of the technological era means that silver is very popular in the industry (think of computers, devices, electronic conductors). Simple economics will tell you that as demand increases with supply at the same rate (or even decreases), costs increase.
This is good news for the silver investor. Even if the chances are high that it will not become a reality, the use of silver and its supply can affect investors as well as the silver market.