There are currently four choices if someone wants to deal in precious metals investing: silver, gold, platinum, or palladium. But only two stand out because they have been used as currencies or for making currencies, for centuries. This article takes a look at gold vs silver investing.
For an investor, choosing which one to put money into can be quite daunting as each presents both advantages and disadvantages as investment units. This article takes a look at the pros and cons of investing with these two precious metals, especially for retirement.
The average current value ratio of silver to gold is 51 to 1. With only this in mind, you may favor gold as investment but there are really other factors to consider. Few people are aware that there is actually more gold available above ground. This might seem to contradict the fact that gold is much rarer than silver. One reason is that many manufacturing processes call for silver, and when the product has been discarded, silver is never recovered and recycled. Looking at this, silver might even become more valuable than gold in the far future.
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Trading history provides a glimpse of the ups and downs of the values of both gold and silver but might not still be a good indicator whether which one to invest in. For example, from June 2006 until November 2008, gold trumps silver and was a better investment. Gold investors during this period gained around 10% while those who gambled in silver lost over 20%. But the tables turned starting November 2008 until May 2011, when silver became a much better investment than gold. From May 2011 until present time, gold has regained the lead.
If a person is investing for retirement, it will be wise to consider all the factors that make each of these two precious metals advantageous and also what makes them a bad investment.
Gold As An Investment
Perhaps the best argument than can come up regarding the superiority of gold is that it is currently considered as an alternative currency to ordinary or flat currencies. Gold is something that you can literally use to purchase products and services. At the moment, silver doesn’t hold that recognition and it seems like it’s going to stay that way for a really long time, if not forever.
Gold is also favored by central banks as the preferred choice when purchasing precious metals. Central banks in Russia and Asia are more likely to continue buying gold. Silver is nowhere on their cross hairs.
At the same cost, gold will require much less storage than silver. Remember the 51 to 1 ratio? This ratio will also apply to storage, making gold more convenient to keep as it requires a smaller area or volume to store. Some investors prefer to store precious metals in Singapore.
But do all of these make silver a bad investment option?
Silver As An Investment
Silver attracts more small investors compared to gold because it’s cheaper to own especially for those with limited investment budgets. For example, 40 ounces of silver can be bought for around $1000. That same amount of money can’t even buy a single ounce of gold.
The value of silver is notorious for high jumps and deep slumps. If an investor is more of the risky type or someone who wants to play with the precious metal market ups and downs, silver might be a better choice. He can buy when silver at its lowest and sell when at the highest, just before it goes down again.
Gold might be a keeper but silver is more widely used. Silver is commonly present in virtually every electronic device and with the growing need for these devices, silver is ever more required. The constant demand for silver in manufacturing processes ensures that silver will always have a place in the precious metals trade.
So there you go. Investing is really a matter of choice. Consider all the options at hand and weigh both the advantages and disadvantages. For their precious metals IRA, risk investors might opt for silver because of its unpredictable value fluctuations, while those who prefer a more stable investment might opt to invest in gold because it tends to be more reliable.