Gold vs Silver: An Investor’s Guide
What to invest in – silver vs gold, the question every investor wants to know right now. As the prices of both rare earth metals are grinding higher, it has everyone wondering, “can go it go even higher?”
At least central banks seem to think so. According to data from the 2020 Central Bank Gold Reserves Survey, 20% of central banks are planning on increasing their gold reserves in 2021. 20% may not seem like a lot, but when compared to only 8% in 2019, it’s a significant number.
So which one to choose? Check out this guide to discover the differences between investing in gold vs silver and which one is the right investment for you.
Investing in Gold
Since its discovery, gold has been looked at as a rarity, an uncommon element that holds value. It has been used for centuries to make fine jewelry, shrines, tombs, statues, and glassware. It then found its place as a medium of exchange being used as a currency to exchange for other goods.
Nowadays, gold is still used to make stunning jewelry, but it’s also useful in certain electronic components as it’s a powerful conductor and maintains its composure. Gold is one of the most useful earth elements, which is why it has maintained its value throughout history.
In the past, the price of gold has largely been correlated to times of economic distress, leading investors to think of it as a sanctuary to put their money when the economy is facing pressure. Individuals can invest in gold in a few different ways. These include:
- Buying gold coins/bullion
- Investing in mining companies
- Trade gold futures
- Invest in a gold ETF
Buying physical gold can be a smart investment, but keep in mind you’ll have to store it somewhere. Gold mining companies physically extract gold from the earth and sell it, allowing investors to diversify their holdings.
Investing in Silver
Silver, just like gold, also has a rich history of being looked at as rare and valuable. The rare earth metal tends to get overlooked by many for gold, but it still offers plenty of value for investors.
Silver is actually the best-known reflector of visible light, making it useful for making mirrors. It’s also used in making beautiful jewelry, batteries, and circuit boards. In photography, silver is used to make high-quality images and protect against others illegally copying the image.
Investing in silver is a similar process as you would with gold. However, there are a few things you should know beforehand. First, silver is fairly volatile and can change price levels quicker than gold. Silver is also more expensive to store than gold because it takes up more space and is less dense.
Gold vs Silver: The Right Investment for You
Deciding which asset to invest in, gold vs silver, comes down to a few different factors. These factors include affordability, price volatility, storage, industrial usage, and basic supply and demand. Both gold investments and silver investments have proven their worth time and time again throughout history.
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