The age-old question — gold or silver? Which is better? Should you invest in gold? Should you invest in silver instead? What’s the difference between the two anyway? Silver is often referred to as the “poor man’s gold”, and possibly for good reason — gold and silver are incredibly similar.
But there are, of course, some differences, and those differences can have people buying one and not the other. First, it’s obvious that the price of gold and silver often have bull and bear markets around the same time and often for the same reasons. The 70s had them both explode, and yet they both were crushed in the early 80s. The late 10 / 20s had a huge gold and silver bull market that we’re still experiencing.
Whenever gold or silver crash — if that happens — we’ll likely see them go down together like the good friends they are. But there absolutely are some differences that we’ll discuss below.
- Gold doesn’t tarnish. Gold doesn’t tarnish but silver does. This isn’t necessarily bad because this means silver has uses — like in photography. Silver has different properties than gold, so it has different industrial uses which drive up demand and destroy silver reserves. Still, it’s a difference.
- Gold is lighter than silver. This is a big deal. Because it’s lighter it’s easier to transport and store. This is important for those looking for extremely long-term assets to invest in.
- There’s more gold in the world. There are 4.58 billion ounces of gold. There is about 3 billion ounces of silver. This means that gold is about 800%. This doesn’t, of course, include “consumed” silver, because that would include electronics and machinery that simply won’t be harvested because, well, we need computers in the world. That leads to the next difference, actually.
- Silver is consumed. There are far, far, far more industrial uses for silver in machinery, computers, electronics and other areas. Silver is generally consumed; gold is generally hoarded. This is one of the reasons there is more above-ground gold than there is above-ground silver.
- Silver is more volatile. Silver has much greater price swings than gold. Just compare any gold chart to a silver chart for the last 10-30 years.
Different markets. Perhaps this just makes me Captain Obvious, but the very fact that gold and silver are in different markets means they’ll often react differently. Different investors, different mining, different everything.
All this to say, the two markets are very, very different. I have both and love both. For a traditional portfolio, gold is more stable and has a better record… but for speculations, I’ve stuck with silver in the past. It’s not uncommon to see nice 20-30% up swings in silver to make a nice profit on.