Silver Vs. Gold Important Considerations For Potential Precious Metals Investors

Rehan
Precious Metals Investing Guide for Beginners

Looking to invest in precious metal but you are not sure whether you should purchase gold or  buy silver ? Then there are a couple of things that you need to know about what makes one metal different from another. Silver and bullion are both “rare” metals. When it comes to investing in either one of them there are some key differences you need to know. Knowing these differences can strengthen or weaken your investment portfolio.

  1. The silver spot price is more volatile

The supply of silver is fast approaching the 1 billion ounce mark. Gold on the other hand is about 120 million ounces on a yearly basis. This makes it seem like the market for silver is 8 times bigger than that of gold but the truth is, because of the low price of silver, the annual supply of silver is much small when one considers the value. It takes a small amount of money for silver to have a big impact compared to gold and other assets as a result silver rises higher than gold on high days and falls more on than gold when the precious metal’s market drops. If you are going to buy silver then you should be prepared for the silver market volatility. You need to be more level headed and not to panic at the slightest drop in the price of silver. Historically, silver has risen more than gold in bull markets and fallen further than gold in bearish markets. Silver investors have to learn to understand the volatility and find ways to make it work for them.

  • Silver is cheaper than gold

The price of an ounce of silver is considerably lower than the price of an ounce of gold. Silver has the same benefits as gold. Silver and gold have both been used throughout history as money. There is no counterparty risk if you invest in silver or gold.

You investment can be completely confidential. You might want to declare profits made from trading precious metals but this is not always the case. Your transactions can be completely private. The advantage with silver is that you get the same benefits one would get from gold but at a lower price. This is one of the reasons why silver is often referred to as gold’s poor cousin.

Silver is much cheaper for the average investor with a smaller budget. It is a better investment to make for someone who is new to the world of precious metals investing.

  • Silver requires more storage space

The silver gold ratio currently stands at 80/1. This means you need 80 ounces of silver is equivalent to 1 ounce of gold. This means that silver will require more space than gold. Compared to gold, silver is less dense. Our silver happens to be 84% more dense than the purest gold bar or coin. This means that it takes 128 times more space than gold at the same price. For example, you could hold $50,000 worth of gold bullion in one hand but need over 10 shoe boxes to hold silver worth the same amount. This makes it impractical to store silver in your sock drawer and it would require a larger and more expensive safety deposit box to sore your silver compare to gold.

In addition to all that, silver needs to be stored in a dry place to avoid corrosion, gold on the other hand will never corrode regardless of where it is kept.

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