Gold or Silver? Why Not Both?Adam Gardiner
When women decide on the jewelry they wear for an evening out, they’re going to pick between gold or silver. But investors don’t have to choose one or the other, they can choose both. Each precious metal has its own advantages vis-a-vis the other, so here are a few of them that are most important to investors.
Silver Is Cheaper
For many investors who may just be starting out, the fact that silver is cheaper is a big draw. The $1,300 per ounce price of gold can be psychologically off-putting to many investors who would balk at paying that kind of money for a single share of a stock. Silver at $15 an ounce is a much easier pill to swallow.
Gold Is Less Volatile in the Short Term
A $5 swing in gold’s price doesn’t make a big difference to gold investors, but a 50-cent swing in silver’s price is pretty major. While silver over the long term moves up or down along with gold, its day to day price swings can be more volatile. That doesn’t make a difference for most investors who are invested for the long haul, but it can make it a little trickier to time when to buy or sell silver.
More Industrial Demand for Silver
Whereas gold’s primary demand comes from investment and jewelry, silver’s primary demand comes from industry. Even though silver’s use in camera film has decreased significantly, that has been replaced by its use in solar panels, electronics, and prototype electric car battery backs. That industrial demand can have positives and negatives, as growing industrial demand can boost silver’s price far quicker than gold, while falling industrial demand can lead to quicker price drops.
Falling Levels of Mining
Because it’s so expensive to explore for and mine gold, costs are rising while known reserves are about to start falling. That could lead to lower levels of gold mined in the future. And because silver is most often found as a byproduct of gold mining rather than targeted as a primary metal, silver production has been decreasing recently too. Both metals will become more heavily dependent on metal recycling for future supplies, which could drive up prices.
Whether you decide to invest in gold, invest in silver, or invest in both, each metal has its own characteristics that attract investors. But they both serve as stores of value and both maintain their value against inflation over the long term. Regardless of what you choose to do, you can’t go wrong investing in gold and silver.