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Gold vs. Silver: Which is a Better Investment?

Donny Gamble
January 27, 2022
gold vs. silver
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Gold vs. silver is the great investment debate that we keep coming back to time and time again. For new investors, it’s not clear which one is a better way to invest your money, whether it’s for a precious metals IRA or to sell when the price rises.

In short, gold is a better investment than silver in more ways than one. So why do people still invest in silver, and is there a future in it? We’re going to explore that, and talk about why new investors get sucked into investing in silver so often.

Investing in gold is the best way to grow your personal wealth in a precious metals IRA and protect yourself for retirement, but silver does have its benefits. Let’s talk about that.

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Gold is The Current Choice, But That Could Change

Currently, gold is ideal for investing because it’s in short supply and high demand. It’s useful for electronics, but so is silver. With a surge in consumer electronics since the start of the COVID-19 pandemic, silver prices haven’t seen a huge hike, but gold has.

So what happens when it’s too expensive for manufacturers to continue to use gold? They’ll turn to using more silver than they are right now, which could cause the price to rise.

Again, this is all speculative: don’t take anyone’s word when they say they “know 100%” that a certain asset is going to rise in value. Nobody can predict the market properly.

You can use current news and industry information to make smart decisions, just don’t treat either of these investment metals like an end-all be-all to your financial future.

Gold is superior right now, but all it takes is a silver shortage to hike the price up. Keep your eyes on both assets.

You Have to Think About Inflation

The point of a savings account is to keep your money protected against inflation, but the point of an investment is to grow your money in spite of inflation.

Any precious metals should be seen as an investment, and if it’s not gaining value beyond the rate of inflation, it’s not a profitable investment.

Gold has historically protected investors against inflation while increasing their overall portfolio value, whereas silver sometimes dips and loses you a few dollars per ounce (depending on the time of the market), and that isn’t including the cost of inflation.

Custodian Fees Outweigh The Benefits of Silver Right Now

Even if you wanted to purchase silver bullion and store it in a precious metals IRA right now, it wouldn’t be worth your money. We talked about current costs and inflation, but beyond that, you have to pay annual custodian fees, and fees on purchase orders to add more silver to your collection.

While it’s not much, $200+ per year with no crazy risk of return makes it hard to look at silver as an investment when the costs pile up so much faster.

Buying and storing silver yourself is still seen as a collectible and is subject to long-term capital gains tax, so no matter how you spin it, silver just isn’t the move (right now).

Should You Invest in Gold or Silver?

Gold is the superior choice. We talk about the last 20 years throughout this article, but we shouldn’t forget that gold started out around $200 per ounce back in 2002, and a lot has changed since then.

You should know these key factors before you’re dead-set on choosing an investment metal.

  • Silver is Globally Accepted Just Like Gold: Silver is often thought of as the “little brother” investment alongside gold, but it’s actually accepted just about everywhere that gold is. The global economy can also drive the price of silver up the same way that it affects the price of gold.
  • Gold Can be More Volatile: Volatility isn’t just a word we pull out when things go bad. Gold has had aggressive price spikes and dips over the last two decades, while silver has seen less drastic changes and more stability. It’s cheaper and in less demand, but if silver falls by 10%, it’s not going to hit you as hard as gold. All it takes is one gold mine excavation to shift the market price.
  • Silver Isn’t as Powerful at Diversification: Because silver is tied to the global market and technology manufacturing, there are more variables at play, which can increase its volatility based purely on the number of potential issues that could arise. Gold prices are affected by less variables (and less often), which is what has helped its continued price climb over the years.

The takeaway is that silver isn’t the better choice, but it isn’t a bad choice. It’s definitely a long-term hold kind of deal, but purely because of the lack of protection against inflation, many investors stay away from silver like the plague.

Next Steps

Silver is not a sustainable long-term investment based on historical data, but it is an attractive investment due to the low cost-to-entry, and potential price increase throughout 2022 (which is entirely speculative and not financial advice).

However, gold is historically gaining value and is more useful than ever before for investors.  Investing in gold is the solid choice, but like with any asset, you want to ensure that you aren’t poised to panic-sell in the event that the price decreases rapidly.

Gold is superior, but the bigger they are, the harder they fall, so be sure that it’s not your only investment in an IRA.

Gold vs. Silver FAQ's

Which is a safer investment: gold or silver?

Both have risk and both can be volatile. Historically, gold is the safer option because of its continued increase in price. Every precious metal will endure spikes and dips, but with silver, it’s only seen one major spike in the last 20 years, which was extremely short-lived in 2011.

Gold has risen astronomically in the last 20 years, which is why we’ve all seen an uptick in gold IRA companies and conversations centered around buying gold in recent years.

Why is silver cheaper than gold?

Silver is far more available and in much less demand. There are less applications for it in financial situations, and due to its highly volatile state (in percentage points) based on the last hundred years, it’s much less attractive to serious investors.

You can look at tons of data and make a decision based on that, and if you look at the last century of gold prices, you’ll see consistent growth and a sharp spike in value over time. That’s infinitely more attractive to investors in every sector.

Is silver a bad investment?

Unlike gold, silver is far less desired on the open market. There’s an abundance of it, so as supply and demand dictates, we have far more than people actually want.

Gold is much more exclusive and has additional applications beyond just bullion, so its being pulled in multiple directions. While silver also has technological applications, we have enough of it that it doesn’t impact the market all too much.

However, with the technological surge of early 2022, there’s a chance that silver may rise temporarily. It’s just not a sound investment long-term and usually relies on major market swings to accrue in value. It’s only an attractive investment because of the low cost-to-entry.

Birch Gold Group

As a leading national dealer of precious metals, Birch Gold Group helps Americans diversify their savings with physical gold and silver.

About the author 

Donny Gamble

I’m Donny. I’m a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

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