Investing in Silver: Is it a Better Investment than Gold?


Gold and silver have been used as currency and as a store of value for thousands of years. Today, both metals are seen as viable investments in uncertain times. Both metals are also viewed as hedging against inflation because they are not likely to experience such high demand in the future. However, there is debate about which metal is the better investment. Here’s everything you need to know about investing in silver vs gold.

Is Silver a Better Investment Than Gold?

While silver has some advantages over gold, the two metals have historically had relatively similar price movements. In some years, silver has outperformed gold, making it a better investment. In other years, gold has outperformed silver, making it the better investment. Over the long term, silver has had a higher average annual return than gold.

When deciding whether to invest in gold or silver, keep the following things in mind:

  1. Inflation Hedge: Due in part to the fact that rising prices for goods and services frequently coincide with a depreciating U.S. dollar, historically, both gold and silver have seen significant gains when U.S. inflation is on the rise. Because the value of both metals is measured in U.S. dollars, when the value of the dollar declines, gold and silver typically increase because they become more affordable to purchase in other currencies. With rising inflation and a declining dollar, silver typically rises more than gold due to greater industrial demand.
  2. Volatility: Due to its propensity to increase with economic growth and serve as a safe haven asset during difficult times, silver tends to be more stable.
  3. Silver Has Not Been a More Effective Diversifier Than Gold: Silver has a moderately weak positive correlation to stocks, bonds, and commodities, making it a good portfolio diversifier. Gold, on the other hand, is regarded as a stronger diversifier. With good reason, it has consistently had very low correlations with other major asset classes and no correlations with stocks. Gold is less impacted by economic downturns than industrial base metals and silver because its industrial applications are relatively constrained.
  4. Affordable: Due to its lower price than gold, silver is more readily available to small retail investors. Silver may be a better investment.

Should you put money into Silver or Gold?

Given the distinctive qualities of each and the current state of the economy, you may choose silver or gold depending on your situation.

How to invest in silver

  •   Physical Metals: Unlike stocks and bonds, gold and silver can be bought as physical assets, as American Eagle coins held in a retirement account or hold physical silver in your Register Retirement Savings Plan (RRSP) account.
  •   Exchange-Traded Funds (ETFs): Investing in gold and silver through ETFs has become a common way for investors to do so without having to worry about storing physical assets.
  •   Mining Stocks and Funds: Investors who want to invest in silver mining companies can buy shares in companies like First Majestic Silver (AG), Wheaton Precious Metals (WPM), or Pan American Silver.

Final Words: Should You Invest in Silver? Summing up

Silver is a valuable commodity that can be used as an investment. While there are some advantages to investing in silver, silver is not a stand-alone investment. There is no clear-cut answer to this question, as it depends on several factors, including market conditions, personal preferences, and investment goals. Some investors may prefer silver because it is typically less expensive than gold, while others may view gold as a more stable investment. Ultimately, it is important to research both metals before making any decisions and to consult with a financial advisor to see which option may be best for you.

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