Best Investment: Gold Or Silver
Throughout history, precious metals have been considered to bear high economic value due to their rarity, aesthetic appeal, and even practical usability. Compared to base metals which are widely utilized in commercial and industrial settings such as manufacturing and construction, precious metals mostly find their purpose in the world economy or jewelry.
Popular precious metals such as Gold, Silver, Copper, Palladium, and Platinum are highly in-demand as currency nowadays. This is a useful guide if you are interested to know which is the best investment between gold or silver.
How To Get Started
Beginner precious metal investors typically start by deciding which type of metal to invest in. With this, it is essential to note that each precious metal has a unique audience. Additionally, the variety of uses of each precious metal also determines the amount of its value in the market.
1. Know Your Precious Metal
As previously mentioned, there are five (5) popular precious metals currently circulating the market, namely: Gold, Silver, Copper, Palladium, and Platinum. Other precious metals that can be mined on Earth, but are not commonly dealt with in the world economy are Rhodium, Osmium, Iridium, Ruthenium, Rhenium, Indium.
If you want to become a successful precious metal investor, you have to gain both practical and scientific knowledge on these different types of precious metals. This will be a useful advantage in building your own metal portfolio.
2. Choose a Type of Bullion Investment
Once you have figured out which metal to focus on, you need to consider the type of bullion investment that you want your metals to come in. The three most common options of bullion investments are bars, coins, and rounds. Each of these forms has its pros and cons.
Bars – In terms of flexibility, bars have a better advantage since they are made available in different weights and sizes. Gold bars start at just one gram and silver bars start at one troy ounce.
Coins – Offer more of a collector’s value to the investor. Compared to bars and rounds, most coins are typically sourced from the original currency of the olden times in countries such as Canada and the United States of America, to name a few. Coins may be considered as both a collectible and as a financial investment.
Rounds – Classified as a popular form of bullion investment for beginner investors. Commonly, rounds are made out of Silver, Copper or Gold and weight between one to five ounces. Another fun and appealing aspect of rounds are the beautiful designs or patterns engraved on them.
Some investors also make use of other forms of precious metal forms aside from tangible bars, coins, and rounds. One can invest in jewelry, stocks in mining companies, certificates for bars and coins, contracts for Gold and metal futures, and precious metal mutual funds.
Those who are not interested in storing physical metal pieces typically purchase certificates that represent the ownership of precious metals that are stored by bullion companies.
3. Have Some Diversity
It can be a smart approach to diversify in different metal types type and forms. This is essential in making your investor’s portfolio of precious metals more secure and profitable. Upon purchasing a few of the main kinds of metals, you can then diversify further by incorporating the less common types or contracts.
Check out Paul Mladjenovic’s book Precious Metals Investing for Dummies to learn more about this field.
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The Gold and Silver Debate
For new investors, both veterans and experts in the field suggest Gold and Silver as the best types of metal to start investing in. In fact, Gold and Silver have been popular choices for precious metal investment for the longest time, compared to others.
However, which of the two should you, as a beginner investor, really start investing in? What are the benefits and consequences that these metals present upon investment?
Going for Gold
Scientifically speaking, Gold is far more valuable than Silver due to its rarity. Hence, companies and individuals most often invest in the said metal. Its popularity transcends that of Silver, too.
Here are some of the reasons why you should go for gold.
Resilience and Market Stability
Gold has been a long-term favorite among the precious metals for its resilience in the market despite instances such as recessions, inflations, and other economic crises. As an investment, Gold holds quite well, and an investor would feel much more secure from risks when investing in it.
Increases Your Assets
Aside from time, popularity, and market stability, Gold has the most significant potential to increase one’s wealth. It is important to note that gold is significantly more expensive than silver and new investors on a budget may find it difficult to acquire gold, especially in a diversified portfolio.
However, it is crucial to keep in mind that the prices of metals rise and fall depending on the demand. As precious metals become scarce, prices immediately go up. This is one of the main reasons why investing in precious metals can be a lucrative venture.
Most people are more confident with metal investments than cash investments due to the increasing demand for precious metals that would, in turn, provide higher profits.
Flexible and Easy to Store
Going back to the benefits of Gold investments, several investors have praised Gold for its flexibility and convenience of storage. It is deemed flexible due to the variety of its forms and weight classes. Moreover, Gold is easier to store because of its rarity and price range. For example, you can invest in a few bars of Gold that would take up less space than that of, say, Silver, which will require you to purchase and store more bars just to be equal with the value of Gold.
Cons of Gold Investment
Despite the high regard for Gold among all of the precious metals, it also presents some shortcomings to investors. One of which is its limited use in the commercial and industrial field. Today, most of the world’s gold deposits are utilized in the production of jewelry. The connotation of Gold with luxury has also led to its usage in only top-of-the-line electronics and other innovations in the fields of medicine, food, and research.
The Silver Lining
As a runner-up to Gold, the promise of Silver investments is also highly desirable. However, every beginner investor should be familiar with the difference between investment-grade Silver and industrial Silver. Investment-grade Silver, also known as fine Silver, is the kind of precious metal that is more popular in the investment market.
Tangible Silver bars, coins, and rounds are typically made out of fine Silver and are worth more than its industrial counterpart. However, companies have reported that there is less investment-grade Silver available in the market than Gold.
Why choose silver over gold?
Affordability
As for its financial aspect, Silver is more affordable than Gold. It enables investors to confidently meet financial gains, albeit small, in the future. An investor can purchase Silver in a variety of ways, too. One can buy physical Silver bars, rounds or coins, Exchange Traded Funds (ETFs) and mining company shares.
More Functionality
Aside from its use as a currency, Silver has more applications in different industries than Gold. Moreover, Silver is one of the most electrically conductive, thermally conductive, and reflective metal on the planet. There is no known substitute for this particular type of precious metal.
Furthermore, Silver is most known for its use in virtually every electrical appliance introduced to man. Its application in a wide variety of everyday consumer items includes, but is not limited to:
- Cleaning (washing machines, vacuum cleaners, dishwashers)
- Water purification (filtration systems)
- Communication (mobile phones, computers, telephones).
It can then be inferred that there is a high demand for Silver, especially in terms of its industrial, consumer, and commercial usage.
The Downside of Silver
Because of the variety of its uses and the increase of its demand throughout the years, companies around the world have mined so much Silver. As a result, the Earth’s deposits of Silver have been recorded to be at an all-time low recently. Hence, there is an increase in competition in the worldwide market for Silver because of this reality.
The difficulties faced in its storage heavily influences the shortcomings of Silver as a precious metal investment. As mentioned earlier, investing in Silver would entail the purchase of several troy ounces of the metal. When investing in Silver bullions, it is highly likely that an investor would buy larger quantities of Silver to account for a higher profit.
In terms of its storage, Silver tends to tarnish over time, hence making it more expensive to store. It also requires a larger storage space than Gold, given the increased amounts of Silver that an investor needs to purchase. If you’re a precious metal investor who want to add Silver to your portfolio, you should utilize safety deposit boxes or compartments in storing Silver bars and coins. Larger quantities of Silver require specialized safes or sealed rooms.
Silver Or Gold – Which is a Better Choice?
Investing in precious metals is a sure-fire way to grow one’s wealth without the risks of cash investments. However, a starting investor should consider his or her decisions based on risk tolerance, budgetary constraints, and the current time frame.
Since the market is continuously changing in terms of supply and demand, investing in precious metals could still be nerve-wracking and challenging. Sometimes, valuable metal investments in the form of futures or shares may present a higher risk than owning tangible bars, rounds, or coins of these precious metals. Despite the high risk, one may expect to get a high reward due to the rarity and specialized nature of precious metals.
New investors have to choose between Gold and Silver when starting out their own investment ventures and portfolios. For both of these metals, the demand does not usually go down, as they are far more sought-after than other precious metals because of their rarity and usability. It is up to the investor to weigh these two precious metal options depending on their pros and cons.
Choose Based on Your Budget
For those with a higher budget, investors highly recommend the purchase of Gold. Choosing to invest in Gold has been a tried-and-tested method of increasing wealth. It is also considered as a symbol of luxury and stability. No wonder most investors make it a point to purchase Gold at a time where its price is most reasonable. This happens since the rising demand for this precious metal ensures the increase of its value over time.
However, if you are just starting with a lower budget, it is best to first invest in Silver. Beginning with small amounts of this metal will immediately make your metal portfolio desirable. Because of its numerous uses and the consistency of its demand worldwide, Silver is a market staple. Similar to Gold, the risks and worries attached to the volatility of prices are lessened.
Gold is a luxury item, whereas Silver is more of a commodity. Each of these metals has its costs and benefits. The business for precious metal investments has been booming in recent years. Therefore it may be safe to say that you can guarantee a profit in both Gold and Silver investments.
In comparison to cash investments like company stocks or shares, investing in precious metals and the products made out of such metals require much patience and understanding of the current economic realities. You can’t trade these metals regularly since the time component of this economic venture heavily influences price and demand. In a sense, precious metal offers a long-term investment.
Make a Smart Choice and Invest in Gold or Silver Now
Purchasing and owning Gold, Silver, Copper, Platinum, or Palladium may be considered a status symbol for the wealthy in today’s economy. Experienced investors have stayed in this field for a reason: the money just keeps flowing, although at a slower pace than that of cash investments.
Despite the fears rooted in instances of economic instability – most notably the recession, it is wise for those interested in investing to consider precious metal investments for the assurance it offers against risks. Some veteran investors are enjoying in this type of venture. The excitement and tension increase when metal prices go up. With the declining state of the world’s metal deposits, investing in precious metals today is a smart and potentially profitable decision.
To know more about the basics of investing in Silver and Gold, try reading Guide to Investing in Gold and Silver: Protect Your Financial Future by Michael Maloney.
