The question: should i invest in gold or silver is a very common one within the precious metals community.
Have you been thinking about putting aside some of your money into precious metals but can’t really decide if you should buy silver or gold?
Then this article is for you.
We will be discussing the main differences between owning silver and gold so that you will be able to make an educated decision after this article.
In the end I will also share with you what my strategy is.
This article will be kept at a beginners level so that no matter if you have been investing in precious metals for 10 years like me or you are just starting off, you will understand the topics we are talking about.
Are you ready? Great, let’s start of with the similarities between gold and silver first because that is very important to understand.
Similarities between gold and silver – Are they that much different?
By just looking at the metals we can obviously directly see that they are different by their color. But there are also a lot of things that the two metals have in common.
Both has been seen as a store of value and money for thousands of years. Gold and silver has always played a huge role in our monetary system.
Until 1971 our paper dollars were backed up by physical gold stored in the vaults. We were on a gold standard, meaning that you could take you $20 note and walk into any bank and ask to redeem it for physical gold.
Our coins also used to contain pure silver.
Why has gold and silver been seen as money?
A quick reason why is because gold and silver are resistant to time. The people of the world has tried a lot of different things to represent wealth and money throughout history.
For example in the Roman Empire, salt were used as money at one point. But because salt goes bad after a while (especially if you live by the coast like the Romans) they quickly realized that salt is probably not the best store of your wealth.
Gold and silver doesn’t go bad over time. The same gold and silver that was used in trade by the Egyptians 5000 years ago is still with us today. It still shines as bright as it did then and it still purchase something.
There are 4 metals that are resistant to time in the periodic table: Gold, Silver, Platinum and Palladium.
All 4 of these metals have a lot in common when you talk about investing. They are all a great hedge against inflation, they are all seen as a safe haven and real assets with intrinsic value that people turn to in rough economic times.
If you invest in any of these 4 metals you are investing in precious metals. They all have a lot more in common from an investing standpoint than they differ.
In short; it doesn’t really matter if you purchase gold or silver (or platinum, palladium). You still get all the benefits of investing in precious metals.
Please leave a comment below if you have any thoughts or input on why gold and silver is money.
Of course there are some things that differ between gold and silver though. That’s what we will be looking at now.
Should I invest in gold or silver? – What’s the difference?
Thank you for reading through the similarities of gold and silver. It’s a very important concept to understand. That all precious metals are giving you safety from economic rough times and inflation.
They have also been seen as the number one store of wealth for thousands of years and will be doing so for thousands to come.
When you have decided that you want to invest in physical precious metals you have already made the big decision. Now you just need to decide what type of precious metals you would like to invest in.
The most popular is gold and silver, so let’s have a look at what’s the biggest difference between them.
Do you want to own a lot or a small amount of precious metals?
This may sound like a stupid question. I mean of course everyone wants to own a lot of precious metals, right?
Well, that’s not really what I meant with this heading.
Silver is a lot cheaper for every ounce (28.3 grams) than gold is. That means that if you invest say $5000 in silver you will get a lot more metal than if you would invest the same amount in gold.
The two piles are still worth $5000 each but the silver pile is much larger than the gold pile. Makes sense right?
The fact that silver is much cheaper than gold has both it’s pros and cons.
Obviously you have to store more metals if you decide to invest in silver. This can lead to higher fees at a storage facility or just that you have to make more room for it at home.
It all depends on how you want to store your coins and bullion.
Because silver is so much cheaper per ounce than gold it’s one of the biggest reasons that people choose silver instead of gold.
Because silver is cheaper it’s easier for you to start purchasing precious metals
At the time when I’m writing this article one ounce of gold costs around $1400 to buy and an ounce of silver around $22.
It goes without saying that most people don’t have $1400 that they can just peel off and go and purchase an ounce of gold, but everyone can afford $22.
This is why a lot of people choose silver instead of gold. You can start investing in precious metals through silver without a lot of money.
If you want to start investing in gold but you do not have enough money to go out and purchase full ounces you should start a free gold bullion savings account.
You can purchase gold by the grams and as little as 1 gram a month. This way you can slowly and steadily accumulate wealth in physical gold without changing your lifestyle.
Gold has monetary use and silver has industrial use
Although gold and silver both is seen as money and therefore have a monetary use, gold is almost only have monetary use.
Yes, gold is a great conductor of electricity which is why you can often see gold plated cables and so on in high end products. But because gold is so expensive most manufacturers don’t use gold in their products. Or if they do, it’s in a very small amount.
Silver has a huge industrial use.
Same as gold, silver is a great conductor of electricity. This is why there is silver in almost all electrical products today.
Your computer, phone, microwave, dishwasher, cars, cameras, medicin and everything else that you can think of contains a lot of silver.
By the laws of supply and demand the more demand there is for something the higher the price of that thing will be, right?
Think about it. There is only a limited amount of silver in the world today and a very limited amount getting mined every year. But each and every year our society is creating more and more electrical products.
Where is all this silver going to come from?
When there is no more silver to put in our electronics (or a short amount) silver will become even more scarce than it is today. This means that if we want more iPhones, computers and other electronics there will be an even bigger demand for silver.
With there not being that much silver in the world the price of it will skyrocket on this increased demand.
Here are some more examples of where silver is used in everyday life today.
As an example: solar power consumes around 16% of the worlds silver production today. And with countries like China saying that they will expand solar energy this number will continue to rise.
Then there is still all the consumer electronics that takes up a lot of silver production as well. At the same time as a lot of third world countries are starting to get access to things like phones and computers.
We can say it like this: If you think that there will be more things needed in the future that have silver in them than today, then silver will go up in price in a big way.
Please answer that question in the comments below. Would love to hear your view.
What’s a good balance between gold and silver then?
I hope you have understood that there isn’t that much difference between gold and silver through an investing point of view.
They are both precious metals and gives you all the great advantages like a hedge against inflation, safety and a true store of wealth.
Silver may have a bigger upside potential because it has a huge industrial usage. The more electronics the world creates, the more silver is needed. The more silver that is needed the higher the price will go.
If it becomes almost impossible to get a hold of silver in the future the price can be astronomical.
What’s a good balance for your portfolio then?
This is very individual and I can just tell you what balance I’m having. I like to keep around a 50/50 balance between gold and silver.
Whenever I purchase more precious metals I put half of that money into buying gold and the other half into buying silver. Maybe you want to go another route? It’s all up to you.
As long as you keep transferring your declining paper dollars into hard physical precious metals you are doing the right thing.
If you have any questions or inputs please leave a comment below. I would love to help you or to discuss any topic related to precious metals.
I hope that we have answered the question: should I invest in gold or silver by now. At least got you started on the right path for doing your own research.
If you want to purchase some gold and silver right away I suggest you check out where I invest in gold and silver by clicking the button below.