Why Buy Gold, Silver, or Both:
Where Should You Put Your Investment Dollars?
When investors consider investing in physical precious metals, they typically focus on silver and gold bullion bars and coins. These two metals are the primary investments that fall within that category, and they each offer different benefits to your portfolio. Due to each of the metal’s unique benefits, many people invest in both gold and silver. But understanding which one you should really focus on can be tricky unless you know how to compare and contrast the fundamentals.
One of the first considerations for investors is how high the demand will be for their investment. The only way to make money, of course, is to invest in something that people will want in the future. Whether it is due to manipulation, decreased production, or global financial turmoil, will demand for gold and silver be greater in the future than it is today?
The demand for both precious metals comes from three different areas: industries, commercial entities, and consumers. While it may seem like it should be the opposite, silver is usually in higher overall demand than gold.
Silver is extremely valuable in the industrial market, with applications in the production of electrical appliances, solar energy, the medical profession, water purification, photography, in preservatives for wood, and for a number of other applications. Even clothing designers use silver in garments and accessories. Of course, the consumer demand for silver jewelry and other items remains at a steady high.
The electronics industry leads the demand for silver; over one-quarter of all demand comes from this sector. So whenever the electronics market is up, you can bet that silver will see a rise. The same goes for solar energy investments and many other industries.
Gold doesn’t have quite as many industrial uses, so the demand for this precious metal is mostly limited to the governments and bullion banks as reserves, as well as retail jewelry and dental markets. Luxury items often use gold-plated silver because silver is significantly less expensive than gold. Unlike silver, gold doesn’t really have a retail market that drives the price up or down. If the overall jewelry industry sees an increase in sales and profits one quarter, it doesn’t necessarily mean that gold will jump; it could just as easily be silver or precious gems that see an increase.
Silver also has historically been valued at around a 15 to 1 ratio to gold, and is mined out of the ground today at less than a 10 to 1 ratio to gold. Silver currently trades at nearly a 70 to 1 ratio to gold prices, which presents a unique opportunity for silver prices to greatly outperform gold should the ratio simply revert to historical averages.
Overall, silver seems to have a higher chance at staying in demand if or when the demand for gold declines.
Another important thing to consider with any investment is the ability to liquidate. If the market trends aren’t favoring your investments, you need to re-evaluate your portfolio, or it’s simply time to cash in and start enjoying the profits from your investments, you’ll need to be able to sell quickly, and for a good price.
Luckily, both silver and gold are very liquid assets. There are countless 24/7/365 precious metal bullion retailers, like SDBullion.com, where investors are constantly buying physical silver and gold. There’s almost no other market as liquid as precious metals.
When it comes to physical silver and gold storage, gold has the clear advantage when it comes to volume. When shipping or storing precious metals, you need far less room and weight (meaning, lower shipping costs) for gold than you do silver. This is because gold is worth a lot more per ounce than silver is; it’s also denser, so a single container of gold bars or gold coins would contain far more gold than the same container filled of silver coins or bars would contain of silver.
The question then becomes, where should you store your precious metals? At your house? In a bank safety deposit box waiting for bank bail-ins? SD Bullion offers precious metals storage in US Depositories outside of the banking system, and is one of the few American bullion dealers to offer fully segregated and allocated offshore gold and silver bullion storage in the Cayman Islands – a jurisdiction outside of the grasp of the US government, and one of the only off-shore precious metals storage options that are tariff free.
According to research performed by Franklin Sanders, a bullion dealer and market historian, the average price of gold has been around 16 times higher than the price of silver every year since at least 1972. During some years, the ratio of the worth of gold to the worth of silver has been nearly 100. Despite silver being in high demand, the value of gold to investors is still holding strong, and that pattern doesn’t appear to be making any drastic changes.
Which Should You Choose?
Silver typically has higher demand, has less available supply, and has been pushed to much greater extremes by the bullion banks’ alleged silver manipulation. Gold has a higher value. Both are easily liquidated. So which precious metal should you choose to invest in? The bottom line is that both gold and silver are solid investment options, and that investing in either, or both, could be an excellent choice for your portfolio and means to insure your wealth against currency devaluation or collapse.
Most investors ultimately go with their own feelings about the future of gold and silver, and which will prove to be either more valuable, based on their fundamental views of the economy and global financial system. In addition to investing in derivatives instruments such as ETFs and mining companies, many investors choose to buy physical gold and silver. This can be done in bars or coins, and there is a wide range of options even within those two categories. Trusted industry leading dealers like SDBullion.com can help you discover the best option for your investing.
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