Gold VS Silver: An Investor’s Guide

January 4, 2023

Summary: Gold Vs Silver: A simple but comprehensive look at investing in either one or both of the noble metals.

Gold Vs. Silver An Investors Guide

Precious metals are, at any point in time, a wise addition to an investor's portfolio. The benefits they provide are not often replicated by other forms of investment and any investor with an eye for preparing for the future will find precious metals a great source of emergency funds.

Of the different precious metals and minerals extracted from the earth, none are so noble as the main two metals: gold and silver. Both of these resources have shaped the fates of entire nations throughout the centuries and investors can still attest that the same is true today.

Though any investment into gold or silver is a good investment, it's worth noting that there are as many things that set the two metals apart as there are uniting them. Knowing their similarities and differences is important to ensure you're getting as much as you can from them. Below are the things every investor should know investing in gold vs silver.

Gold Vs Silver: Main Similarities

These are the things that make investments in either or both metals worth it:

Hedges Against Inflation

It's a well-known benefit of the precious metal investments that it can hedge against the depreciating effects of inflation. Over time, the value of money decreases, and, by extension, the prices of goods and services increase. You might have long-term investments already ongoing, but the fact of the matter is by the time they mature and start to yield interest -- they're not as valuable as they would have been.

This is where investments in precious metals come in. As an investor, you can use silver and gold to offset the effects of inflation and you get the most value you can from all your investments.

Related: Best Gold Stocks to BuyBest Silver Stocks to Buy

Great Sources of Emergency Funds

There are sadly many things that can go wrong with the market. Market failures and the plummeting of stock prices are an ever-looming threat and, despite our best efforts, they can never be expelled as possibilities.

Political unrest and natural disasters too can seemingly come out of nowhere and destroy the equilibrium of investments you have made for yourself. Of course in life, emergencies of all sorts can arise and require you to quickly find a source of cash to cover costs.

Gold and silver investments, in one form or another, are infamous for being highly liquid and being easily converted to cash when the need arises. And no matter what political, social, or market climate their value tends to remain intact. In the event of an economic collapse, albeit unlikely, and fiat money is rendered useless -- chances are the world will revert to the standard of gold and silver.

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They Usually Only Increase In Value

As investments in their own right, silver and gold are worthy options for profit-making in their own right. Gold's rarity for instance, and the fact that it does not tarnish or corrode, means that its value is pretty much guaranteed -- only increasing over time.

With silver though, it's more of a wild card. Since the element's removal is a common currency, its value tends to fluctuate more. It is also not as rare as gold and many financial institutions prefer not to carry silver. That being said, silver is widely used in the technology industry for its conductive properties. Investments in silver, along with investments in the technology sector it's in demand in, might offer you a diversified and stable source of income.

Their Main Differences

These are the things that set the two elements apart and should be carefully considered by investors:

Silver Is More Volatile

The sorry truth is that the annual silver supply is much smaller than most large companies' market caps. For instance, under current prices, gold is usually 12 times the value of silver. Part of the reason for this is that the silver sold annually is usually the byproduct of zinc, lead, and copper mines.

It simply isn't as rare enough as gold to be considered a high-value investment. The volatility though can be used in your favor. Short-term changes in the price of silver can be played for benefit in bull markets.

For example, from the decade of 1970 to 1980, the value of silver increased 3105% whereas the value of gold increased 2328%. Though silver's price can drop as dramatically as it increases, taking advantage of it in the short term buying-and-selling can definitely provide you with quick and easy profits.

Gold is More Expensive

The most obvious difference is that gold is more expensive than silver. An investor in precious metals can definitely afford to take short-term positions with silver early in his or her investment career rather than invest in large enough amounts of gold from the start.

Silver Is Harder To Liquidate

Owning silver is all great until the time comes where you need to liquidate it. Since you'll need a whole lot of silver to match the value of gold, many banks and institutions forgo dealing in silver stockpiling altogether. Some many pawnshops and brokers do not see silver as a worthy investment in the first place.

Unlike gold, you might have a harder time trying to find a place to convert your silver into cash.

Gold Is Not As Used Industrially

For better or for worse, silver is an indispensable element in many industries. One of the reasons why the price of silver is so volatile is because the element is interwoven so deeply with the greater market. Approximately 50% or more of silver supply is used in industries to make everything from circuit boards to solar panels.

Gold is valued for its rarity, its beauty, and the potential of its supply to eventually run out. Silver investments should be considered as an investment in the various industries that need them for their manufacturing.

Silver Is Harder To Store Than Gold

A safety deposit box can hold about $170,000 worth of gold. The same-sized deposit box can hold can $2,300 of silver. The fact is, owning large money's worth of silver bullions will lead to such storage needs that many investors and banks find it more practical just to invest the same amount in gold.

Recommendation: BUY & Store Your Gold Safely with a Gold IRA with Goldco.

Which Should You Choose?

Consideration of Gold vs Silver should extend more to personal considerations as an investor too. These includes:

What Can You Afford?

If you're a beginning investor, chances are you won't have the capital enough to invest in gold right away. Many beginning investors start by buying silver coins and taking short to medium-term positions in bull markets. Bull markets occur when you're expecting the value of securities to rise.

It has been stated that the volatility of silver can provide more value in short-term bull markets. If you play it right, you can buy silver and sell it for a profit enough times to have the capital to diversify to gold and other investments. Of course, this requires some time and research.

Related: How to Sell Gold – A Beginner’s Guide

Are You Investing for the Long Term?

If you're looking for something ideal to put your money in and forget about over time, then gold is more ideal. Though there are some fluctuations here and there, overall the value rises steadily over time.

Tax Consideration and Adding Value to Other Investments

Another consideration you have to make before investing is the taxes and fees involved in owning precious metals -- especially if you intend on holding it physically. In the UK for instance, gold bullion investment is VAT-free while Silver has a 20% VAT rate. (Related: How to Buy Gold Bullion)

In the US, long-term capital gains in precious metals that are held for more than a year are taxed 15% or 20%.

Precious Metals Trading

Some investors deal solely in precious metals investments and profit by the ratio of the value they have compared to each other. An example of this is the gold-to-silver ratio.

Related: Gold ETF vs Physical Gold: Which is Better?

Gold-to-Silver Ratio

This is simply the ratio of the number of ounces of silver needed to match the value of an ounce of gold. This ratio changes from time to time and many experienced investors use it to their advantage.

For example, you possess 1 ounce of gold and expect the price of silver to drop to an unprecedented low of 100. You convert your 1 ounce of gold to 100 ounces of silver -- the ratio currently being 1:100. Now, let's say you bide your time and weight for the value of silver to rise again to another extreme. Suddenly the value of silver is 50 and the gold-to-silver ratio is 1:50. With your 100 ounces of silver, you buy 2 ounces of gold and end up with more gold than when you started.

There are also rations for the other precious metals and knowing then will be helpful if you wish to dabble in some trading of that kind.


Hopefully, this article was helpful to you in terms of investing. As an investor, you should know that the question really isn't whether or not one precious metal is better than the other, but what your strategy is for capitalizing on their properties. A good and well-plotted strategy is more valuable and, arguably, the real source of income for an investor.

About the author 

Jenna Lofton, an expert in stock trading, investing, and financial planning, combines over a decade of experience with rigorous academic training. Holding dual MBAs in Finance and Business Administration from the University of Maryland, Jenna's expertise is grounded in a deep understanding of the financial markets. Her career, which started on Wall Street, has evolved into empowering others through her insights and analyses in the dynamic world of finance.

Based in New York City, Jenna's approach is informed by her hands-on experience as a former financial advisor and her keen observation of market trends. She is known for translating complex financial concepts into actionable strategies, making her a valuable resource for both seasoned investors and newcomers to the stock market. Her commitment to financial literacy and her ability to demystify investment principles have made her a respected and authoritative voice in the investment community.

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