Is Investing in Silver a Smarter Choice Than Investing in Gold?

Rohan Mathew

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Are you a newbie in the world of investing? Are you looking for the best investment vehicle in these challenging times?

With the stock market slumping globally, more people are turning to alternative investment options. And two of the most popular options are silver and gold.

The thought of investing in gold or silver may be quite intimidating at first. Nowadays, it’s also very easy to buy gold and silver online, which means that it would be more convenient for you to invest in both metals

Hence, the conundrum of investing in gold vs silver continues to spark debates. But which commodity offers the better deal? What are the pros and cons that you should be aware of before investing in any of these commodities?

Continue reading below to compare the benefits and disadvantages of gold and silver.

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The Pros of Gold

In the topic of investing in gold vs silver, we must first lay down the cards of both commodities. To arrive at the best option that suits you best, let us go over the pros and cons of the two.

Gold will likely retain its value even if paper currency inflates. Local currencies are volatile. They go up and down depending on several factors that affect the global market.

Though there may be policies in place to keep foreign currencies steady, they still do not work 100% all the time. A case in point is the current coronavirus pandemic. The global crisis resulted in foreign currencies to crash.

But with gold, you will have a firmer grasp on the value of your investment. This is because gold is a precious metal with a finite supply.

It is a high-quality hedge option. A perfect example was during the 2007 financial crisis. As the stock market plunged, the demand for gold went up.

And because of the limited amount of gold, prices for the commodity also soared.

Today, investment experts say that gold is one of the safest things to invest in amidst the pandemic. Compared to stocks including the blue chips, investing in gold at this point in history is less risky.

The Cons of Gold

Switching over to the cons, one of the major disadvantages of investing in gold is its historical return. If we look back at how gold performed throughout history, its returns are not the most stellar.

Investment gurus note that if you invest $10,000 each on gold, stocks, and bonds – and wait for 200 years — your gold investment will give the worst returns. The value of your stocks after 200 years will be a whopping $5.6 billion.

On the other hand, your bonds will give a yield of about $8 million. As for your gold, you only get to enjoy a measly $26,000 out of your investment.

Another downside with gold is you will only get the money you need when you sell it. This means that as long as you own your gold, it practically gives you nothing.

Compare this with other forms of investment like real estate, you can turn the latter into passive income. With just a few modifications, you can turn your property into a place that people can rent.

After a few years, you can use the rental earnings to buy more assets. Unfortunately, you cannot do these things with gold. The only way is to sell it to enjoy its monetary value. And if things around the world go really bad, gold may end up being worthless.

The Pros of Silver

As for the advantages of investing in silver, the commodity does not suffer like gold in terms of supply. There is more abundance in raw silver that people can mine compared to gold.

In 2010, demand for silver started to rise. Moreover, the supply also increased but not at the same levels as the demand. This supply-demand gap is one of the key reasons for silver’s notable performance.

Another advantage of silver is it offers more industrial uses than gold. The share of industrial demand for gold is only at 15% max. On the flip side, the estimated total industrial demand for silver is above 50%.

And like gold, silver is also gaining ground in the middle of the pandemic. When it comes to affordability, silver is cheaper than gold. This makes it more appealing especially among newbie investors.

The Cons of Silver

As for the disadvantages of silver, the biggest one is the lack of liquidity. Like gold, you need to sell it first to enjoy its monetary value. Though you can opt to sell at pawn shops and jewelers, don’t expect to get an amount that you initially expected.

Another con for silver is you may physically lose them. This is evident in the case of silver bullions. Thus, you need to consider investing in a reliable safe or deposit box to keep your silver bullions safe.

Last but not least, its return on investment (ROI) is not as stellar. Just like gold, it doesn’t give substantial payouts even if you invest in the long term.

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The Verdict 

So what is the final verdict? Is investing in silver the wiser route to take than buying gold? The answer can be yes, especially if you are starting to learn the ropes of investing. Silver is the cheaper option between the two.

It also offers roughly the same benefits as gold. But they also share similar disadvantages. But at the end of the day, both silver and gold and safe investment haven especially during tough times.

And if you don’t feel too confident in investing, you don’t have to do it alone. There are reputable companies like Investor Crate that specialize in managing precious metal investments.

Learn More About Investing in Gold vs Silver

Now that you have an idea of the investing in gold vs silver debate, you can pick the right commodity that will suit your needs the best. But there are many things to learn other than buying gold vs silver.

Discover all the tips and tricks you need by checking out more of our in-depth guides regarding precious metals. Feel free to keep reading right here!