Over the past decade, the investment world seems to have become full of “gold bugs” – those looking for safe haven protection have gone to the safest of them all, the asset that everyone can always rely on. Gold buying has never been more popular among both professionals and private investors than it is today.
However, there is a small but rising minority of voices that is asking whether silver is an even better prospect than gold for those wanting to get into precious metal investing. Let’s find out.
Recent performance
Precious metals in general have performed far better than conventional investments over recent years. This is a pattern that has been seen time and again throughout history – when the economy is stuttering, gold and silver prices go up, and when the economy stabilizes, the prices settle back down. However, the interesting point is that while gold saw a spike increase of 70 percent in value during the key period from 2008 to 2010, as we entered the financial downturn, silver actually outperformed it, with an increase of 100 percent.
Volatility considerations
However, those who invest in precious metals generally do not do so for overnight gains. The whole point of gold and silver is that they constitute a long term investment that is going to weather adverse market conditions and come out a little better than it started.
Short term volatility is part and parcel of this, and silver is far more prone to such volatility than gold. In other words, that 100 percent spike is nothing unusual, and it can go down just as dramatically in a short period. To understand the reason behind this, we need to examine the demand conditions.
Silver is far more widely used in industry, jewelry, batteries, dentistry and other such processes than gold. Industrial usage accounts for more than 50 percent of all silver demand, compared with around 15 percent for gold. This means silver is far more exposed to industry cycles and market conditions.
Buying silver
So does that make silver a better or worse investment than gold? The question is a subjective one, and the real point is that it makes it a different investment. Diversification is the key to a successful investment portfolio – including precious metals in that portfolio makes sense, and including both silver and gold only means it is even more diverse. It is easy to invest in silver bars by purchasing them from a reputable suppler. They come in a variety of weights and sizes, from one ounce bars that you can slip into your pocket to those iconic 70lb monsters that we have all seen in the movies.
It is also possible to buy silver in the form of coins, which have the added benefit of being highly collectible – meaning the value of the asset can be more than the weight of the silver itself.
Whichever format you choose, there is no doubt that silver is a worthwhile addition to your portfolio. As for whether it is better than gold, however – most experts agree that there are pros and cons to each, so a little of both is the ideal solution.
