Precious Metals
With recent events in the economy, more and more Americans are feeling nervous about the well-being of their assets. There’s an eerie feeling that we’re about to see some economic pain, and that is helping to prompt questions concerning a flight to safety.
Safe haven assets can take many forms, with cash and US Treasuries traditionally playing a role as generally accepted safe assets. But with inflation remaining problematic, and rates on Treasuries falling as a result of the Fed’s rate cuts, more people are starting to take a look at other safe haven assets like precious metals.
Gold and silver have traditionally served as both safe haven assets and inflation hedges , and given their performance both during the 1970s stagflation and in the aftermath of the 2008 financial crisis , they’re getting a second look today.
There are numerous benefits to owning precious metals. Here are four to keep in mind.
One benefit of precious metals is that they can help to diversify your assets. Many people stick to conventional financial assets such as stocks and bonds, and consider a mix of various financial assets to be sufficient diversification.
But in the event of a financial downturn, both stocks and bonds can lose value. We last saw this in 2022, as both stock and bonds markets lost value.
Gold and silver are often considered countercyclical assets in that they tend to perform well when conventional financial assets aren’t performing well. And one goal of diversification is to help mitigate losses in one area of your assets with potential gains in other areas.
Many people who hold assets in tax-advantaged accounts such as a 401(k) or IRA may not realize that they can diversify those holdings into gold or silver. Many 401(k) plans don’t offer any sort of exposure to precious metals or commodities, and many brokerages that offer IRAs stick to conventional financial assets and don’t offer physical precious metals options.
But with a gold IRA or silver IRA, you can buy gold and silver and benefit from the same tax advantages as any other IRA account. And with tax-free transfers or rollovers from your existing 401(k), 403(b), TSP, IRA, or similar retirement accounts into a gold IRA or silver IRA, you can easily diversify your retirement savings with gold or silver.
Gold and silver have also served as hedges against inflation for years, and for good reason. Paper currencies have come and gone over the years, but gold and silver remain.
Gold and silver tend to maintain their value over the long run, and retain their purchasing power even when currencies lose theirs. While the US dollar has lost 87% of its value since 1971, gold has gained over 7,500%.
Because of the countercyclical nature of gold and silver, they tend to gain in value at times when markets are falling. During the 2008 financial crisis, for instance, gold gained nearly 25% while markets lost over 50%.
During the stagflation of the 1970s, both gold and silver saw annualized gains of over 30% over the course of the decade, far outpacing double digit inflation.
Gold and silver have served as the ultimate store of value for millennia. Gold has always been synonymous with wealth, and even central banks retain ownership of gold because they realize that gold is the ultimate form of money.
Gold and silver can never go bankrupt like companies that issue stocks and bonds. And neither gold nor silver have ever been worth so little that it takes wheelbarrows full to buy groceries.
One of the questions that confronts precious metals buyers, particularly first-time buyers, is whether they should buy silver or gold. Here are a few of the advantages gold has versus silver.
Gold’s ability to act as a safe haven and an inflation hedge is well known. And anytime precious metals are mentioned, gold is often the first metal that comes to mind.
Many of the best known bullion coins are also gold coins, such as the South African Krugerrand, the American Gold Eagle, the Canadian Maple Leaf, or the UK Sovereign. Gold has that ability to attract attention that silver doesn’t.
Gold is also an incredibly compact store of wealth. $50,000 worth of gold can fit in your pocket, and hundreds of thousands of dollars worth of gold can fit in a purse.
Try that with silver. $50,000 worth of silver would require over 1,500 ounces, which might fit inside a duffel bag or suitcase but would weigh over 100 pounds.
That’s probably one reason the international gold standard became the norm for commercial transactions, because large sums of wealth could be transported and transferred far easier with gold than with silver.
Finally, gold has an advantage versus silver in that its price is generally more stable, both on the upside and downside. If you’re looking for long-term price stability, gold may have the edge.
Just because gold has some advantages doesn’t mean that silver doesn’t have any. After all, there’s a reason that silver remains a popular commodity. Here are some of the advantages silver has over gold.
The silver price is significantly lower than the gold price, which is psychologically beneficial to many people. Even if you’re buying $100,000 worth of precious metals, you’ll get more physical “stuff” when you buy silver than when you buy gold.
In fact, right now you could get more than 80 times as much silver as gold, assuming you’re able to buy at spot prices. Some people just like to have the feel of having a lot of coins, and 20 large silver coins certainly can make you feel like you own something of value, versus one small gold coin that’s not much larger than a quarter.
Because silver’s value is lower, it always was the preferred metal for everyday transactions at point of sale. Older Americans may still remember when silver coins circulated as money.
If the US monetary system breaks down, there’s a chance that gold and silver could reassert their role as monetary metals. And many people buy silver specifically to have on hand in case they need to be able to use precious metals in everyday commerce.
Silver coins are available in numerous different sizes, and are perfectly suited for smaller transactions than gold. And that “just in case” scenario is one that many people are preparing for.
Silver also has the potential for greater upside gains than gold, which is one reason some people prefer silver to gold. In the aftermath of the 2008 financial crisis, for instance, silver’s gains were more than double those of gold, with silver increasing in price over 500%, while gold was up only 266%.
These kinds of price moves are often overlooked, and certainly aren’t appreciated by a great many people, but they’re an example of how silver can really catch up to gold during periods of high precious metals demand.
There are a few other considerations that should be taken into account when deciding on gold or silver.
The first relates to the sources of demand for gold and silver. There is some industrial demand for gold, but according to the World Gold Council, the top three sources of gold demand are from jewelry, investment, and central banks.
Silver, by contrast, is in greater demand from industry. Solar panels, for instance, are quickly becoming a primary source of silver demand, as photovoltaic cells require silver to function.
According to the Silver Institute, industrial demand now makes up more than half of silver demand, with the rest coming from jewelry, physical investment, silverware, and photography.
Gold and silver prices fluctuate in relationship to one another, with the historical relationship being roughly between 15:1 and 16:1, meaning that one ounce of gold would buy 15-16 ounces of silver.
In recent years that relationship has fluctuated, with the ratio varying between about 15:1 and 120:1 over the past 50 years. And in the past five years that ratio has varied between 65:1 and 115:1.
This fluctuating relationship means that at times silver is overvalued relative to gold, and at other times gold is overvalued relative to silver. Some people who buy gold and silver on a continual basis will look at the gold-silver price ratio and assess which metal they think is overvalued, then buy the undervalued metal in the hope that it will appreciate in price.
The decision on whether to buy gold or silver is a personal choice that is dependent on your unique situation. For some people, gold may better satisfy their needs.
For others, silver is the better choice. And for still others, it makes more sense to get both.
Both silver and gold offer the possibility of asset protection, wealth preservation, and portfolio diversification. Both can make great gains during times when markets are down and the economy is struggling. And both have been treasured by Americans looking to help safeguard their savings for decades.
Goldco is a leader in the precious metals industry, and has surpassed $3 billion in precious metals placements. Thousands of our customers have bought gold and silver from us, and we continue to serve many more customers who come to us every day looking to help safeguard their hard-earned wealth with gold and silver.
If you’re looking to help safeguard your assets with precious metals, give Goldco’s experts a call today.
This article was originally published in November 2022 and was updated in February 2025.
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Many Americans today are looking at ways to help safeguard their wealth With growing economic uncertainty, more and more people are worried about the possibility of recession or other financial...
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With fear of potential recession growing and inflation rising , more and more Americans are looking to help safeguard their assets Many are choosing to buy precious metals like gold and silver,...
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DISCLAIMER: This site is general in nature and not tailored to the specific goals of any individual. Purchasing precious metals may carry risk. Some of those risks associated with precious metals include the following: prices may rise and fall, which means the value of your metals may go up or down over time and you may sell for more or less than you paid. Past performance does not guarantee future results. Goldco cannot guarantee, assure, or promise future market movement, prices, or profits. Customers should understand that all purchases have some degree of risk. Customers should make certain that they understand the correlation between risk and return. Commodities involve risk and are not suitable for all investors. There is no assurance that commodities, i.e. precious metals, will achieve their objectives. Return and principal value will fluctuate and your portfolio, when redeemed, may be worth more or less than the original cost. Even though Goldco and its representatives are precious metals specialists, we are not licensed financial advisors and do not give financial advice. Additionally, Goldco cannot provide tax or legal advice and will not advise as to the tax or legal consequences of purchasing or selling precious metals or opening a Precious Metals IRA. Individuals should consult with their investment, legal or tax professionals for such services.
