If Gold Is So Great, Why Should I Buy Silver?

Gold and silver. Silver and gold. They’re often mentioned together, and for centuries they circulated alongside each other as money. But these days gold seems to get all the attention and silver often ends up forgotten.

If you’re in the market for precious metals, odds are that it’s gold and its performance that has gotten your attention and gotten you thinking about buying precious metals. But what about silver?

Yes, gold’s performance during the 2008 financial crisis was pretty stellar, with gold gaining 25% during the same period that markets lost more than 50% (October 2007 to March 2009). And yes, silver may not have done as well during that period.

But overall in the aftermath of the 2008 crisis, the gold price saw a greater than 250% increase while the silver price increased over 500%! So why does silver continue to be ignored?

3 Reasons to Think About Silver

Imagine silver as the little brother to gold. It’s always operating in gold’s shadow, never getting the same amount of attention. But every now and then silver really shines. Here are three reasons why you may want to think about buying silver.

1. Potential for Price Growth

The first reason to think about silver is that it offers the potential for price growth. Yes, gold has seen some great gains over the years, but the silver price has too.

The silver price can be more volatile than gold, both to the upside and downside. What that means during bull markets is that when gold prices are rising, silver prices may be rising faster, percentagewise.

During the 2008 crisis and its aftermath, the gold price nearly tripled from trough to peak. But the silver price more than quintupled from trough to peak.

The relationship between gold prices and silver prices is often expressed as a ratio, the gold to silver price ratio. Traditionally the two prices fluctuated between 15:1 and 16:1, meaning that the gold price was 15-16 times higher than the silver price.

Today, however, the gold to silver price ratio is closer to 85:1. For those who look at long-term trends in the prices of gold and silver, this may indicate that silver is undervalued relative to gold.

If you expect the ratio to be more like 50:1, then an 85:1 ratio means silver has quite a ways to increase in price in order to reach that target ratio. During the last financial crisis the ratio was closer to 40:1, so if the ratio reverts to that level, it could mean that the silver price would more than double.

It’s this potential for rapid price growth during bull markets that has many people excited about silver. And with the way the US economy is shaping up, and the increased likelihood of recession, everything seems to be lining up to push silver into another bull market.

2. Portfolio Diversification

Portfolio diversification is another reason people choose to invest in silver, just like with gold. They choose to diversify with silver for many of the same reasons as they do for gold, including considering silver as a safe haven or a hedge against inflation.

Because silver can make greater gains during precious metals bull markets than gold, it can help protect wealth during times of economic turbulence. But because silver also has downside risks, it can be a slightly riskier asset to hold than gold.

Still, for those looking to diversify their portfolios with precious metals, silver can play an important role in doing so.

3. Silver as a Hedge

Just like gold, silver can play a role as a hedge against inflation, or even against complete collapse of the currency system. Silver has served as a monetary metal for thousands of years, and units of silver have impacted the monetary system through names of silver-based currencies such as the pound, the mark, or the dollar.

Silver continued to serve as money in the United States until it was replaced by base metal coinage in 1964, and silver coins continued in use in Europe until the 1970s. Even today, silver dimes from 1946-64, silver quarters from 1932-64, and silver half dollars from 1964 bear essentially the same images as their base metal counterparts in common circulation today.

Because of that familiarity, this so-called “junk” silver has become very popular with those looking to hold silver as a hedge against currency collapse. If the dollar were to become dangerously devalued, or the US currency system were to completely fall apart, there’s a good chance that silver money, and not gold, would become the means of exchange for daily commerce.

That’s why many people like to stock up on silver as well as gold, because they believe that silver will play a crucial role in any future precious metals-based monetary system. The only downside to junk silver is that you can’t buy it for a silver IRA. But there are other choices out there too.

Ways to Buy Silver

Direct cash purchases of junk silver, popular one-ounce silver coins, or silver bars and rounds are undoubtedly popular. But you can also purchase certain silver products with a silver IRA.

A silver IRA is a precious metals IRA that operates in the same way as a gold IRA, allowing you to own physical silver coins or bars within a tax-advantaged IRA account. You can fund a silver IRA by rolling over funds from existing tax-advantaged accounts such as a 401(k), 403(b), TSP, IRA, or similar account into your silver IRA.

Then you can use those funds to purchase physical silver coins or silver bars. It’s important to remember that the only silver you can purchase with silver IRA assets are Silver American Eagles or silver coins and bars with a minimum fineness of .999 (99.9% pure silver). Thus the reason that junk silver and older silver circulating coins aren’t IRA-eligible.

Thankfully there are numerous IRA-eligible products available today, and Goldco offers many of them. We work directly with mints around the world to bring our customers high quality IRA-eligible silver coins, with unique designs and guaranteed purity.

With over $2 billion in precious metals placements and over 5,000 5-star reviews, Goldco works hard to provide quality silver products and exceptional customer service. If you think buying silver may be right for you, call Goldco today to learn more about your silver buying options.