You’re thinking about buying precious metals, but you aren’t sure if you should start investing in gold or silver. You wonder to yourself, “Is there a big difference between the two? What do I need to know when it comes to gold vs. silver?
Besides the fact that both of these investments are precious metals, there are definitely certain differences to keep in mind as an investor. Below, I will share some specific differences between gold vs. silver and share the different implications on how they’ll affect your portfolio.
The Price of Silver Is More Volatile Than the Price Gold
The difference in price action is either a good thing or bad thing depending on how you look at it. Short-term investors could seriously get cracked if they buy silver at the wrong time and it starts dropping in value. On the other hand, long-term investors are likely to make more money investing in silver than investing in gold over the long term.
How do I know? I know by looking at the historical value of silver and gold from 1970 up until five years ago. The breakdown between gold and silver is as follows:
From its lowest price in 1970 to its highest price in 1980, the value of gold grew by 2328%
From its lowest price in 1970 to its highest price to 1980, the value of silver grew by 3105%
From its highest price in 1980 to its lowest price in 1985, the value of gold dropped by 66.5%
From its highest price in 1980 to its lowest price in 1985, the value of silver dropped by 89.1%
From its lowest price in 2008 until its highest price in 2011, the value of gold grew by 166%
From its lowest price in 2008 to its highest price in 2011, the value of silver grew by 448%
From its highest price in 2011 to its lowest price in 2016, the value of gold dropped by 44.6%
From its highest price in 2011 to its lowest price in 2016, the value of silver dropped by 71.8%
What did we learn from this information? For starters, we learned that the price swings in silver investments are far greater than the price swings in gold investments by the percentages shared above.
Even better, we learned that long-term investors made a boatload of money investing in gold and silver over the last 45 years, and only gave back a small percentage in comparison to the massive gains made during these time frames.
Silver Is the More Affordable Option Over Gold
This may seem obvious, but it’s important nonetheless because gold and silver have many similarities. Some of those similarities include:
Silver and gold are both hard assets. They are physical assets that you can hold in the palm of your hand. Most investments today are “paper” or “digital” profits, but this investment is physical and must be stored in a vault on your behalf if you are a precious metals IRA account holder.
Silver and gold are both legal tender. Today’s “paper” currency is actually digital and the money is created out of thin air, which causes depreciation. Gold and silver will never depreciate the same way because they can’t be created out of nothing.
From a practical standpoint, owning silver is a lot better than owning gold. Not only can you buy more of it, you will also have an easier time using it if you ever had to use it as legal tender.
Think about it…
Could you walk into a store with an ounce of gold and expect to clerk to make change? An ounce of gold is $1756 at the time of this writing. It’s impractical to use it as currency.
Silver, on the other hand, is trading for $22.61 at the moment. Most stores have enough change to break a $20 bill and they will also have enough money on hand to provide change for an ounce of silver if it came down to it.
Silver Needs More Storage Space Than Gold
This makes a lot of sense and you may not have thought about it but it’s the truth. $50,000 worth of gold weighs 2.6 pounds. You can easily hold it in the palm of your hand.
$50,000 of silver weighs roughly 189 pounds. It’s obviously much heavier and it takes up a lot more space than gold.
Clearly, there are many differences between gold vs. silver. These differences may or may not play a role in choosing which investment to buy. If you’re looking to buy a more stable investment, choose gold. If you’re looking for a more volatile investment that could potentially grow a lot more in value, silver is likely the best way to go.
The overall value of gold has a rich and storied history. Even though this precious metal was being used as legal tender all the way back to 643 BC, we can only track its value back to 30 BC, which is a little more than 2000 years.
Today, we will look at the value of gold and see how the price has changed over the last 2000 years, but mainly focusing on the past 100 years, because that’s where things get really interesting.
The Value of Gold during the Roman Empire
In 30 BC, when Emperor Augustus was in power, he set the price of a pound of gold and made it equal to 45 coins. It didn’t possess the same monetary value as it does today, but each pound was measured by the amount of coins the Emperor determined it was worth.
Nearly 200 years later, in 211 AD, Marcus Aurelius Antonius degraded gold’s overall value by converting a pound of gold into 50 coins, as opposed to the 45 coins that a pound was worth leading up to this point.
It was degraded even further by Diocletian in 284 AD, when he diluted the value to 60 coins per pound. And Constantine the Great diluted the value 20 years later to 70 coins per pound, because he needed additional money to finance his military.
The Value of Gold in Great Britain Near the End of the Middle Ages
Great Britain made a change in the year 1257 by setting gold’s price at 0.89 pounds per ounce. And they continued to raise the price of gold by about 1 pound every century until the year 1717, when the gold price had reached a 4.25 pounds.
Not too long after 1717, many nations began printing paper currencies. They backed this currency using the gold standard in the 1800s. But Great Britain continued to keep the value of gold at 4.25 pounds/ounce until the Bretton Woods Treaty was signed. This happened in 1944, which saw sweeping changes because at this point the majority of countries used the US dollar as their gold standard moving forward.
Why? In 1944, the United States owned 75% of the gold reserves available in the world.
The Value of Gold in the US Starting with the Great Depression
Shifting gears to the United States, it makes sense to follow the gold prices in the US from this point on since America had control of more than 75% of gold reserves throughout the entire world back then.
Prior to the US Gold Standard, the US dollar used the British Gold Standard. It was the British Gold Standard that was responsible for the Great Depression beginning in August 1929 and led to the massive stock market crash that followed in October 1929.
At this point in 1929, the value of gold was $20.63 per ounce. This was due to deflation, the depression, and the hoarding of the gold reserves that FDR forced Americans to hand in after he took office in 1933. The Gold Reserve Act, as it was called, was implemented in 1934.
From 1931 to 1934, gold doubled in value from $17.06 per ounce to $34.69 per ounce. From here, the value of gold didn’t precipitously change all that much until 1968, when it was suddenly worth $41.10 per ounce. In this same year, the feds also increased interest rates.
The US went into another recession in 1970, and the value of gold had dropped to $35.17 an ounce in 1969 and $37.44 an ounce in 1970. Within the next two years, the value of gold took a massive leap and went from the $37 in 1970 to nearly $64 an ounce in 1972. In 1973 the value of gold made a massive increase again to $106.72 an ounce. It leaped in price again in 1974 to $183.85 per ounce.
By 1978, the price of gold per ounce in the United States of America was $226. In 1979, it made another massive upward move and more than doubled to $512 per ounce. During this year, the Federal Reserve introduced a stop-go policy. This made inflation much worse, which is why the value of gold rose tremendously high.
In 1980, the value of gold was $589.75. But the price of gold per ounce started to fall in 1981 and it stayed relatively low all the way into the new millennium, when the price in 2001 was $276.50 per ounce. We were also in the middle of another recession at this point.
In 2002, the gold bull market began and over the next 20 years, the price of gold rose tremendously until it reached the current day price of $1757.22 per ounce.
As you can see, the gold has gained tremendous value over the last 2000 years. It’s the longest lasting currency in the history of the world and it will continue to gain value for many years to come.
There are so many options to choose from when picking a gold IRA company. Augusta Precious Metals is an excellent choice for most IRA investors, but they certainly have their positives and negatives as well.
I’d like to help you better understand Augusta Precious Metals by sharing my detailed review of the company. I’ll tell you about their fee structure, how they measure up to scrutiny through ratings and complaints, and other important aspects that retirement investors need to know about.
Continue reading to discover the truth about Augusta Precious Metals.
About Augusta Precious Metals
This company has a rich and storied history. With more than nine years in business, Augusta Precious Metals has really made their mark on the gold IRA investing space in a positive and effective way.
First off, the company has tremendous experience in the precious metals IRA imdustry. Everyone on their team, from the receptionist to the CEO, has an important mission in mind. They have dedicated their lives to providing helpful guidance to retirement investors. And they focus on helping them diversify their portfolios with silver and gold investments.
Augusta has three commitments that they stand by and make to each and every one of their customers. Their commitments include:
Total Transparency – they provide their customers with the bid and ask differentials before they ever make a purchase. They do not charge hidden fees, provide timely transaction status updates, and answer any and all questions whenever they are asked.
Simplicity – investing with simplicity is the name of the game. Augusta Precious Metals has gone out of their way to simplify the silver and gold purchasing process. They perform 95% of the legwork including pre-selecting products, which makes it easy for future retirees to invest confidently while making their lives much simpler.
Customized Metals Portfolio – the professional agents at Augusta Precious Metals have tremendous knowledge in the gold and silver space. They share this knowledge with their customers and use it to help them build a personalized precious metals portfolio to meet their retirement objectives.
Augusta Precious Metals Fee Structure
Their fee structure is as follows:
$50,000 minimum investment
$80 per year maintenance fee
$100 per year storage fee
$50 one-time account setup fee
5% gold and silver bullion coin markup
Free transit insurance on qualifying orders
Free shipping on qualifying orders
Experience an Economic Education like Never before
Before ever spending a dime with this company, Augusta Precious Metals is focused on educating their customers about gold IRAs and their products and services. They have highly trained precious metals experts on staff who are ready and able to answer all of your questions and concerns.
Even more important, they stay on top of any and all potential emerging issues that can have a positive or negative impact on those saving for retirement. In particular, they focus on issues that could potentially be offset by greater diversification through investing in gold and silver.
Augusta Precious Metals Pros
New customers receive 10% back for silver coin purchases
They offer a free educational webinar to new customers that explain the benefits of opening a gold IRA for retirement
Account specialists focus on meeting their clients’ needs with patience, friendliness, and understanding
Customer support lasts a lifetime
Customer service consistently receives many five-star reviews
Joe Montana is their corporate ambassador as well as a customer
AAA rating with the Business Consumer Alliance
A+ rating with the Better Business Bureau
9 out of 5 stars rating with Trustlink
8 out of 5 stars and Very High Rating on Google My Business
Augusta Precious Metals Cons
According to previous customers, the account creation, funding, and buying process took longer here than at other companies
Platinum and palladium bullion aren’t available for investors to purchase
High minimum investment – $50,000
Highly Graded Marks from Consumer Rating Agencies
Do you know what I like most about Augusta Precious Metals? They have an excellent track record with consumer rating agencies including the BBB, BCA, and Trustlink.
When you view their page on the Better Business Bureau’s website, you’ll see that they have an A+ rating from the agency itself. And if you look deeper at reviews left by 85 previous customers, they have a 4.96 out of 5 stars rating from the people who do business with them. This is a tremendous testament to their care and effectiveness in this industry.
Their Trustlink ratings are no different. They currently maintain 4.9 out of 5 stars based on 273 customer reviews. This company is well known for being incredibly transparent with their customers and they have a phenomenal reputation as a company that provides exemplary customer service.
The BCA, better known as the Business Consumer Alliance, gives this company a AAA rating (their highest) and they currently maintain a perfect 5 out of 5 stars from 65 previous customers who left reviews on their website.
What does all of this amount to?
Well, it amounts to trust. It shows you that Augusta Precious Metals is a trustworthy company that you can feel comfortable doing business with. They take alternative investing for retirement very seriously and they go above and beyond to help their customers achieve their portfolio diversification goals and dreams.
Before I go, I just wanted to mention a few things that I regularly read about Augusta Precious Metals from current and previous customers. These individuals think so highly of this organization that they felt compelled to write about them on the Internet.
To paraphrase, some of the things generally said about Augusta include:
They provide a very informative and pressure free web conference about IRA diversity
Their website is easy to navigate and understand
When dealing with Augusta Precious Metals, customers appreciate their friendly, courteous, and professional manner
This company is great, fantastic, wonderful, amazing, etc.
Are you finally ready to diversify your retirement portfolio? If so, you should contact Augusta Precious Metals and sign up for their free web class.
This pressure free service is provided to help educate their customers. You’ll gain better knowledge and understanding about investing in gold and silver for retirement and you’ll learn about portfolio diversity and other important matters from highly trained professionals in the precious metals IRA space.
Gold and other precious metal IRAs are like any investment. Meaning, a certain amount of risk is carried by those who make such investments. Consumers should be on high alert with the many scams available online. These scamming platforms claim to help customers make a ton of money from such investments in gold IRA companies.
Like any other investment, you can lose your capital. Past performance isn’t a guarantee of any future gains. Nonetheless, prospective customers should obtain a clear understanding of these fees associated with such investment options before agreeing to go ahead with an investment in a gold IRA company.
What Is a Gold IRA Company?
A gold IRA is classified as a self-directed individual retirement account holding approved precious metals (like gold) instead of paper assets. In contrast to other retirement accounts, a gold IRA is backed by physical gold. Other than this vital difference, gold IRA accounts (and other precious metals IRA) aren’t noticeably similar to Roth and traditional IRA.
When investing in gold IRAs, you don’t carry this tangible gold yourself. Purchased gold, palladium, silver, platinum, and other precious metal are stored in a secure depository. However, if you wish to invest in gold and silver IRAs, you can do so through a gold dealer.
Nonetheless, for those who are interested in making an investment in their gold IRA, it’s crucial to research the various rewards and risks associated with such activities in gold investment companies. For example, top gold IRA accounts can be a smart method of diversifying your retirement portfolio while also gaining the best IRA rollovers. This is because making an investment in gold is known for its value during times of high inflation.
However, the advantage gold IRA offers is also known to come with a massive drawback. The value associated with investing in a gold IRA account tends to slump when paper stocks are performing well.
How Does a Gold IRA Work?
Gold IRA accounts function almost the same as traditional retirement accounts. However, the one significant difference is that this investment is backed with gold, silver, platinum, or other precious metals. Many people begin a gold investment with $10,000 or more. Nonetheless, gold IRA companies can also sell physical gold to customers who can’t afford to invest this large initial sum. Once this minimum investment is made in a gold self-directed IRA, the gold, silver, platinum, and palladium are stored in secure storage facilities that are managed by the respective gold IRA company.
However, there’s more to setting up gold IRAs than simply paying the minimum deposit. A brokerage firm buys these precious metals that back the funds in your gold IRA investment. The trustee (or custodian) sets up and manages this gold and silver precious metals IRA account. Some potential custodians include credit unions, banks, loan associations, trust companies, and other organizations with state and federal approval. Additionally, these custodians should be IRS-approved. Moreover, holding gold in mutual funds and EFTs are also IRS-approved.
What Are the Pros and Cons of Gold IRA?
Many risks come with investing in even the best gold IRAs. However, you also receive some excellent benefits. One of the most prevalent is that you can diversify your retirement portfolio. Proponents of gold IRAs tout the reliability offered when investing in gold compared to paper currency’s inconsistent value.
How much precious metals are worth on any given day heavily depends on various economic factors. This might include industrial demand, the overall market health, dollar value, and production supply. Historically, the value of gold has increased during periods of economic uncertainty or long-term inflation.
Nonetheless, a major setback is the higher costs and storage fees associated with gold IRA companies that don’t accompany Roth or traditional IRAS. Moreover, gold and silver coins don’t produce income stocks or pay dividends while there are rules about holding collectible gold, silver, platinum, or palladium and you can’t store these assets in your home.
You might be struggling to identify if you should be investing in the best gold IRA companies. Here is a list of the pros and cons to help make your decision easier:
Early distribution comes with tax penalties
Minimum deposit requirements
No bank guarantee
How Can You Find the Best Gold IRA Company?
When it comes to choosing a gold IRA company to purchase precious metals and gold investments, your choices aren’t limited. Nonetheless, you should always pick a gold IRA company that completes transactions transparently and honestly. Don’t invest in precious metals or gold bullion, coins, and bars from companies that advertise ‘collectible coins’ or ‘special’ home storage offers, as these aren’t approved by the IRS. Here are some of the ways you can ensure you’re picking the best gold IRA company:
Read Gold IRA Reviews (from Third-Party Sites)
Spend some time reading online customer reviews from users who invested in precious metals and gold IRAs with a specific company. This can help you understand their experience with this precious metal IRA company, which is crucial as it’s likely the experience you can expect to receive.
Some scammers online might seem legitimate and offer a good gold IRA rollover. However, researching these companies offering precious metals IRAS can prove exceptionally beneficial especially when turning to the Better Business Bureau and Business Consumer Alliance.
An IRA company listed under the Better Business Bureau details a lot of crucial information that you should know before investing in precious metals. You can find how many years a company has been in business, which helps eliminate any scammers.
Work with a Dedicated Advisor
Educational resources are your best friend for anything that’s investment-related. It doesn’t matter if you’re investing in a precious metals IRA company or the stock market, educational resources can help you make the savviest decisions when it comes to your precious metal IRA.
An experienced gold investment advisor can offer personal advice based on your existing portfolio and financial goals. If you’re new to the world of precious metal IRAs, working with a smaller company can ensure you gain optimal customer support to get you started. With this customer support, you can find your footing before you begin exploring your various options.
Consider the Depository
Under IRS regulations, your minimum investment in gold or other precious metals can be stored in unallocated or allocated depositories. Many gold IRA companies allow you to pick what type of vault you would prefer (offshore or domestic).
Unallocated depositories: These storage facilities are more like a high-security warehouse where you can store your inventories of precious metals based on refinery, weight, year, and size. When these assets are distributed, investors can receive the same type of bar or coin they originally purchased. However, it isn’t likely to be the same physical object.
Allocated depositories: These depositories are more like a safety deposit box. Thus, your inventory is kept in this one space and contains the actual bullion or coins you originally purchased.
Picking the Best Investment Options:
You have a choice between Gold Group, Augusta Precious Metals, Birch Gold Group, Patriot Gold Group, American Hartford Gold Regal Assets, Noble Gold, and many more. However, we’re diving deeper into these various options later in this article, so continue reading.
What Can You Do to Make the Most Out of Your Investment?
Along with choosing the right precious metal investment company, you can conduct other processes to ensure you’re gaining the best results possible. Here are some vital tips that come highly recommended:
Purchase High-Quality Assets
Gold is a tangible commodity, which is unlike traditional assets, bonds, and stocks. Hence, the quality and condition of gold play a role in its worth as an investment. Don’t settle for a lower price of gold if the condition isn’t high-quality, as this can adversely affect your returns. You should also consider the annual fee when purchasing these various tangible commodities.
Stay Up-to-Date on Spot Prices
Similar to other commodities, the price of these assets is determined by the market. You can see many fluctuations in gold’s value. Even though this asset is known for being more constant, you can still see that the prices do go up and down. Hence, posted prices are required to be updated frequently. It’s savvy to buy bars than coins when possible. This is because gold dealers gain higher commissions on these coins while bullion bars offer a more accurate reflection on the asset’s spot price. With this spot price, you should also consider the annual fee applied to this investment to make the most economically beneficial decision.
Always Request Detailed Receipts
Vault receipts, also known as warehouse or warrant receipts, provide the ownership of commodities and confirms your investment. These detailed receipts are necessary to disprove or prove your precious metals’ true value that has been purchased or sold, especially during the time and date of purchase.
Follow IRS Rules and Regulations Involving Gold IRA
Collectible and rare gold coins provide unique investment opportunities. However, the legitimacy and worth of these need to be checked. The IRS has specific policies regarding what types of gold bullion are accepted in an IRA. It’s vital to understand these when making such investments.
The Bottom Line
Gold is an excellent physical asset to invest in, but that doesn’t mean it doesn’t come with risks. There’s a likely chance of theft even when placing this gold in insured deposits. Hence, using companies with legitimate depositories, like Brinks or Delaware Depository, is your best option. Look at the annual fees of these storage facilities and the fee structure of such investments before making any purchases. This can help you make the best decision and gain optimal results.