In addition to helping build a more diverse portfolio and hedging against inflation, investing in precious metals is a smart way to ensure you will always have access to quick cash because it holds immense value and is relatively easy to sell or borrow against when needed. What are the pros and cons of investing in precious metals, particularly gold vs silver? And what is the best way to monetize precious metal assets? We’ve compiled everything you need to know in this easy-to-understand guide.
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Should I Buy Gold or Silver?
While gold and silver aren’t the only investment-worthy precious metals, they are the most common, with many compelling reasons to buy either metal. Let’s break down the pros and cons of buying gold vs silver.
Gold vs Silver: Pros and cons
Silver
Pro: Silver is cheaper than gold per ounce and is more accessible.
Con: Silver has greater market volatility than gold.
Gold
Pro: Gold is a better portfolio diversifier because it isn’t closely tied to the industrial industry like silver and is more resilient to market declines.
Con: Gold is more expensive.
Long-Term Returns of Gold and Silver Investment
Surprisingly, the popular precious metals have not performed as well as one might think over the past century, with gold and silver boasting returns of 4.87% and 3.46%, respectively, including compounded interest. Still, both are incredibly liquid investments worth adding to any diverse portfolio, with gold outperforming silver long-term.
Volatility
Gold and silver are subject to price volatility. However, silver tends to be more volatile because, unlike gold, it is also an industry commodity used widely in electrical appliances, medical equipment, batteries, smartphones, solar panel cells, and much more. When the economy declines, and the manufacturing of those items slows, the demand and price of silver will drop.
Relationship to the market
Both precious metals are excellent portfolio diversifiers. While silver is more greatly affected by the stock market because of its additional connections to industrial industries, gold is not and is more resilient to economic downturns.
Gold is also categorized as a countercyclical investment that benefits from market lows. It climbs when the rest of the market declines because investors often put money into gold to create liquidity when the stock market is down. When the market rebounds, investors can then sell their gold and reinvest into other assets.
Utility
That brings us to how each metal is utilized. Both are a means of stored value, either as a physical currency or other assets, and are used in some capacity in the fashion and jewelry industries. Gold doesn’t have many uses outside of jewelry, while silver is utilized in jewelry and manufacturing. In fact, more than half of silver commodities are used commercially compared to gold, with about 10% of demand tied to commercial use.
How to Invest in Gold and Silver
The most basic gold and silver investment avenues include either buying physical forms of the precious metals (coins, bullion, luxury jewelry, etc.) or through the derivatives market, such as exchange-traded funds (EFTs), mining company stocks, and mutual funds that invest in mining companies.
Bullion
Coins
Exchange Traded Funds (EFTs)
Mining Stocks
Futures
Click here to learn how to use gold as collateral.
Precious Metal Investment Tips
Silver is more predictable than gold when investing and can potentially net substantial gains if you buy while the market is low. Alternatively, gold is a solid investment for any portfolio to prepare for when the market declines and you need reliable liquidity.
Conclusion
Customers nationwide trust Qollateral to sell or loan against precious metal assets. We provide the highest-offer loans and purchase prices for gold and silver and are a safe and reliable lender bonded and licensed by New York City’s Department of Consumer Affairs. Additionally, we are insured by Lloyd’s of London and operate out of the most secure building in America, the International Gem Tower. You will have peace of mind when you choose Qollateral to help you leverage your precious metal assets into quick cash.
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