Many precious metals investors have a hard time deciding if they should invest in gold or silver bullion. This article will help you decide which one fits your investment goals the best.
The choice between gold and silver depends on three important factors: Your wealth, your risk tolerance, and economic conditions.
100 years ago, the gold price per ounce was only $20, but the gold price today is almost $1,300 for the same amount! That's a great investment return, but it's also prohibitively expensive for most people.
Many investors simply don't have enough money lying around to spend $1,300 on an ounce of gold. But they also don't want to buy a tiny gold coin that may be lost or stolen. For investors who don't have enough cash to buy gold, silver is the best alternative.
The spot price of silver is only $17.55, and that's really cheap. Just imagine what that silver will be worth 20, 50 or even 100 years from now!
Volatility and Risk
Both gold and silver tend to move in the same direction. However, silver is more volatile and risky than gold. This means the swings in the silver spot price will be larger, and the metal will do better in good times and worse in bad times compared to gold. Gold's price action is much more stable and less risky.
Investors who have already built up wealth will be better served by gold because it is the safest precious metal, and its value tends to be the most stable. As mentioned earlier, it is also the most expensive precious metal so it is best suited for wealthier investors for both of these reasons.
Silver, on the other hand, while also a good way to store wealth, is an even better way to make wealth because its price can shoot up very quickly - just like a stock on the stock market. People who are still building up their wealth tend to prefer the greater potential returns and cheaper price of silver.
Economic & Market Conditions
Sometimes, the choice buying gold and silver can depend on what is going on in the economy. Precious metals demand is based on three factors: Jewelry, investment, and industrial demand - and these factors affect gold and silver differently.
For example, gold demand is predominantly driven by investment demand; especially, as an alternative to bonds in the U.S market. There is also a huge demand for physical gold in India and China for the new year and wedding seasons in those countries. On the other hand, a large percentage of silver demand comes from industrial use. The metal is used to create things like solar panels and semiconductors. And demand for these devices can influence the price of the metal.
Hopefully, this article has made the decision between buying gold bullion and buying silver bullion easier. To sum it all up, the best precious metals investment depends on your wealth, your risk tolerance and market conditions in the economy. But if you are still unsure of which precious metal to invest in, simply buy both!