Gold seems to topple anything it’s pitted against. Being the third most important currency in the world today, what exactly is silver up against?
The price of gold suddenly increased since September 2005 from just $450 per ounce, this went as high as $1,875 per ounce come 2011. Currently, trading value of gold is now playing at around $1,650 – and that is a large jump from the stats in 2005. Most investors keep a watch on the market trends primarily on gold, crude oil, Dow, and S&P 500.
Gold has now arrived at mainstream as its value become humongous over the years. In the past, gold value has only been eyed by insurance companies, central banks, and gold miners but it has now reached Microsoft and IBM. During the final crisis that transpired from 2007 – 2009, investors jumped into gold investments as it is considered a safe investment. Any investor can now invest in gold with the use of exchange traded funds (ETFs)
Here are the key differences and similarities with Gold and Silver as investments:
- Volatile pricing. The yearly gold supply is at 120 million ounces while the silver supply is almost 1 billion ounces. The silver market then is approximately 8 times much bigger as compared to gold. However, the low price of silver makes its value much lower as compared to that of gold. Following the current market prices, the annual gold supply is now 9 times bigger as compared to silver.
- Hard Assets. Both silver and gold are tangible assets with intrinsic value that you can hold with your hand. This is also something that can’t be hacked unlike cryptocurrencies and the like.
- Good as Cash. Yes, both silver and gold are treated just like money. Silver though has been used more often in coinage in comparison to gold.
- Confidential and Private Properties. Your investments are made private and confidential. There is however an IRS requirement with tax equivalent when you sell gold or silver for profit.
- Industrial Use. Silver has a higher industrial use at 56% as compared to just 12% of gold. As such, silver is dubbed to be an indispensable metal because life and technology could not possibly exist without it. Gold, on the other hand, has limited uses for jewelry as well as dental and medical equipment.
Silver definitely holds the competitive advantage against gold as far as pricing and industrial use is in focus. You get just the same benefits of gold in silver at a fraction of a cost. Silver is considered affordable for an ordinary investor. Being indispensable, silver certainly is high in demand in many industries considering that it is reflective and electronically as well as thermally conductive which is used in practically anything.
Gold and silver are highly volatile which is why investing in these elements is for those who know when the timing is right for investing in each one. The key is to trade for long term. There is a reasonable level of fear with investing in gold and silver due to the swerving prices but still owning silver and gold can be a hedge to beat inflation and keep your finances afloat especially in dire economic times. Which of these two metals are worth the investment, it really depends on your investment objectives and uses. It also depends on what you can afford to lose or gain. Silver, dubbed as the poor man’s gold is an affordable investment while gold is pricey yet high-income generating. Define your investment goals and diversify. Between silver and gold, which one can turn your investments around to your advantage? – You decide.