Silver is more volatile, cheaper and more closely linked to the industrial economy. Gold is more expensive and better for diversifying your overall portfolio. One or both of them may have a place in your wallet. Arguably, the best use of gold as an investment is to mitigate portfolio risk.
Both silver and gold can function as safe haven assets, but gold tends to have a better track record over longer periods of time. That said, in shorter periods, the specific dynamics of each market end up being more important for their respective returns. Regardless of the asset you buy, remember that neither asset generates cash flow, so the best thing for long-term investors would be to take a buy-and-hold approach with a profitable and growing portfolio of stocks. Gold and silver prices tend to move in the same direction, but gold is a better hedge against the recession.
Therefore, silver is ideal for investors with small budgets and also for any small financial need that may arise in the future. Gold is more suitable for larger purchases. Bankrate does not offer advisory or brokerage services, nor does it offer individualized recommendations or personalized investment advice. This difference may not seem to be of immediate importance to an investor, but it is a behind-the-scenes event that could have major consequences under certain circumstances.
It's relatively easy to hide some gold coins in a sock drawer or cookie jar, but those same hiding places aren't practical for the same investment in silver. Demand for gold and silver comes from different sources, with gold being primarily an investment asset and silver an industrial asset. These precious metals are reputable and have a long history, but they offer different types of benefits and security, and investors should know how they are likely to perform in multiple economic climates before deciding to invest in any of them. Because of the volatility of silver, it may be more attractive than gold if you want to speculate on short-term fluctuations.
The advantage of silver over gold is that you can get all of these same benefits, but at a much lower cost. The relatively high price of gold per ounce makes it easier for investors to store value compared to silver, making it cheaper to store an amount equivalent to the value in dollars. The commonly accepted reasons why gold is more expensive than silver, despite its relative abundance, are that gold is used more in jewelry, gold is considered more of an “alternative currency” than silver, and central banks and individual investors demand it more than silver. In addition, investors are informed that the performance of previous investment products does not guarantee future price appreciation.
On top of that, most silver is much less dense than gold. Pure silver is 84% larger in volume than pure gold.
