Gold Or Silver—Which One Should You Invest More In?
When investing in precious metals, such as gold and silver, the main predicament is which one to invest in. Both gold and silver prices are extremely volatile, changing from time to time.
In the last decade, the prices show quite a similar pattern following a generally upward trend. Gold prices increased from $265/Ounce to $1850/ounce in the last 12 years, while silver prices ranged from $5/Ounce to $45/ounce.
So, when trying to decide which of these assets to invest in, you need to keep these factors in mind.
Gold to Silver Ratio
The Gold/Silver ratio is the ratio between gold and silver spot prices. It determines the number of ounces of silver that one ounce of gold can buy. For instance, a ratio of 24:1 shows that from one 1 ounce of gold, you can be 24 ounces of silver, in a given period.
The ratio is widely used by investors to check which metal is currently undervalued compared to the other. In the last 10 years, the ratio has favored gold, ranging from 32:1 to 84:1. The gold to silver ratio indicates that silver has remained undervalued in comparison to gold.
Liquidity is the measure that represents how easily an asset can be bought or sold in the market without any drastic change in its price. The higher the asset’s liquidity, the easier it is to buy or sell.
Both gold and silver are extremely liquid assets; they’re very high in demand and even viewed as a form of currency by some individuals.
Gold and silver are easily available in markets in many forms such as jewelry and bullion coins; selling them is not a hassle either due to its high demand in various industries.
Even though both silver and gold have very high liquidity, when compared with each other, gold is more liquid than silver. The reason for that is its greater demand and supply in the market. There is more above-ground gold available than silver, plus the use of gold in various industries, such as jewelry, electronics and medicine, is far greater than that of silver.
Transport and Storage
Transport and storage of gold is easier than silver. As gold is worth more than silver, more dollars’ worth of gold can fit in the same sized shipping package or safe. In addition to this, gold is also denser than silver, which means the same volume of gold will give you more dollars than an equivalent volume of silver.
Both metals are profitable options for investment especially if you want to secure your retirement. The metal you want to invest in depends on your preference and goals for the future.