Gold or Silver? The Better Precious-Metal Investment

          Olympians will always prefer to win a gold medal as opposed to its silver counterpart. Similarly, recording artists will continue striving for gold certification from the Recording Industry Association of America, while settling for silver records as consolation prizes. Though gold gets all the glory when it comes to societal prominence, it is not necessarily the better option for those looking to invest in precious metals. Both gold and silver have their pros and cons when compared side-by-side. The decision ultimately lies with the individual, and we have provided a few nuggets as a guide for potential investors.

          Big Difference in Price

          The fact is gold may be out of the reach of some investors because of its price tag. US Money Reserve, which displays real-time prices of precious metals on its website, has gold priced at $1709.18 per ounce as of press time. Silver is currently trading at $32.96 per ounce. It is the 10-year trends with the two metals, however, that give silver a slight edge. The price of gold has grown by nearly 600 percent in the last decade. Meanwhile, silver has skyrocketed from $4.37 an ounce in 2003 to a high of $48.58 in early 2011; about a 1200 percent gain, according to Abinash Narayanan of Arbitrate Magazine. Both metals have remained relatively steady over the past couple years, but economic uncertainty across the globe can produce these dramatic spikes at any time. Now may be the most opportune time to invest in silver, as this could be the last time in the foreseeable future that it carries a somewhat affordable price.

          Industrial Uses of Silver

          Gold has had value throughout human history because of its use in making jewelry, as legal tender, and as a valuator for fiat currencies. Silver has similar uses historically, but is now gaining more value because of its industrial versatility. Solar energy is becoming more common in America and Europe due to the rising cost of oil. A vast majority of photovoltaic solar cells are bonded together by a silver paste. The Silver Institute estimates 100 million ounces of silver will be used in producing these solar cells in the year 2015 alone. Demand for silver will subsequently rise as solar energy becomes more common and accepted in Western households. The laws of economics tell us that as the demand of a commodity rises, the price falls. But price has not been a factor in the demand for silver, as the <a href="">US Mint</a> continues to sell its Silver Eagles at a 50-to-1 ratio to its gold counterparts. Simply put, investors know that either gold or silver is better than paper money, regardless of price.

          Arbitrary Value of Gold and Silver

          Gold is prettier than silver, and that may be the primary reason it costs so much more. There are only about 2500 tons of gold mined each year across the world, compared to almost 21,000 tons of silver. But the fact remains that the Earth contains at least five times more gold than silver. In other words, perception has made gold more valuable, while silver is statistically and otherwise more rare than gold.

No comments:

Post a Comment