Gold vs. Silver

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.

  1. 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.

  1. 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.

  1. 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.

Final Thoughts

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.

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