The Better Investment Gold Or Silver
According to research in 2010, precious metals were some of the most lucrative assets over the previous five years earning investors an impressive 42% return from their 2010 precious metal investments.
Despite these optimistic numbers, investors should research the current economy and metals market before diving into investments. The value of precious metals tends to fluctuate over time, so taking the time to consider current market trends is crucial to achieving the highest rates of returns.
Since metal value correlates inversely with economic decline, precious metal prices are currently higher than ever.
As of late, a big question on precious metal collectors and investors minds is this whats the better investment, gold or silver? Its a decision, Gold Vs. Silver.
Gold has traditionally been considered the better investment, as it is the only precious metal to have consistently increased in price every year for the past ten years.
Is silver a good investment? silver began to challenge gold by tripling in value during the short span of June 2009 to April 2011 to its all-time high of $49.82 per ounce.
Before you start rummaging through your silverware drawer for potential investments, be wary that silver has fallen to $35 per ounce since its high in April.
You Should Invest In Silver If
You might prefer silver if youre the kind of investor who wants exposure to safe assets in your portfolio, but you also want the ability to realize larger gains on these assets and are willing to accept a slightly higher level of risk. The best candidates for silver investments:
- Have a Total Portfolio Value of Under $35,000. Silver comes with a much lower price per once and is therefore more accessible than gold. Those just starting out with relatively small investment portfolios will likely be better served choosing silver over gold.
- Want Larger Gains. Although there are times when gold will increase in value faster than silver, theres a strong historical argument that silvers value has room to run in the future. If youre looking for stronger growth in your safer assets, silver is likely the way to go.
- Are Risk Tolerant. Silver is a safer asset than equities, but there are risks involved. Silver is more volatile than other safe assets like gold, Treasury bills, and many bonds. This volatility increases risk.
- Are Willing to Put Time In. Because price swings happen in silver faster than they do in gold, its important that you pay close attention to market movement, economic reports, Federal Reserve statements, and industrial demand for clues as to when to buy and sell.
How To Buy And Keep Gold Coins
If you decide to buy gold coins, get it from a reputable dealer or financial institution. We wouldnt buy gold coins on Craigslist, but thats just us.
If you buy gold coins from individuals or from anyone else youre not sure of, have the gold coins authenticity verified first. You dont want a collection of gold-plated lead.
U.S. gold coins come in one, one-half, one-quarter, and one-tenth ounce denominations. You pay a premium over the price per ounce when you buy gold coins, which is how the dealer makes a profit.
You may pay a higher premium if you buy gold coins less than one ounce each. You should generally buy bullion coins, such as the American Gold Eagle, Canadian Gold Maple Leaf, or South African Krugerrand.
Collectors coins, called numismatic coins, are a different game than bullion gold coins. They can sell at a very high premium, and their prices are dependent on more factors.
Unless you are very knowledgeable about collectors coins, stick with bullion coins.
Once you have the coins, you may be tempted to run the coins through your hands, like Ebenezer Scrooge.
But of course you wont you should leave coins in their cases, away from scratches and fingerprints.
Dont even think of hiding gold in your house, unless you have a safe. Thieves know where to look, or they can find it with a metal detector.
For very little money, you can rent a safe at a bank for your gold and other valuables.
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Should I Buy Silver Coins Or Silver Bars
The answer depends on your silver investing goals. If you want to buy silver at the cheapest price gram-for-gram, it may be best to buy bars. For those who want to buy legal-tender coinage, silver coins represent the better buy.
represent something of a compromise. They are common numismatic coins that are too well worn for the collecting tastes of most hobbyists. Thus, they are worth only their silver value. It’s one of the cheapest types of silver coin you can buy. Yet you still gain the advantage and liquid versatility of buying legal-tender silver bullion.
You can read more about silver coins vs. silver bars by following the link.
When Should I Buy Silver
So, how can a smart investor know when it is a good time to buy silver?
Well, fortunately, you don’t have to stumble about in the dark — there are a few indicators that you can use to judge the best time to dive into silver.
The Gold/Silver Ratio
When purchasing silver, some investors look at the silver/gold ratio to gauge the right time to buy.
Source: macrotrends
The gold/silver ratio is simple to calculate just divide the price of gold by the price of silver. The higher the resulting number is, the more undervalued silver is in comparison to gold. The lower the number is, the more overvalued silver is.
So for example when we have a high ratio like 70 or 80, then this is a great point to buy silver as it is worth much less in comparison to gold.
When the ratio between the two metals is lower, e.g. around 50, then this would be considered a good time to buy gold instead.
At the time of writing, the ratio is high and that is why personally, I am currently purchasing silver!
Silver/S& P Ratio
The silver/S& P ratio compares the value of silver to the stock market in general.
To calculate this metric, we first multiply the price of silver by 100 and the divide that number by the S& P index value.
Monitor the Silver / S& P ratio for great silver bargains!
So with the numbers as of today: / $1,917.48 = 0.8.
This, being below 1.0 is another strong signal to buy.
Historical Comparison
Finally, we can plain old look at the historical price data.
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Large Cap Stocks Vs Gold
And this difference in owning productive assets doesnt really show up in any single year. But over long periods of time, these productive assets do something that Gold or other commodities really just cant do compound your savings.
This chart here shows the long term growth of an equal investment in gold compared to a diversified basked of large cap growth stocks, like Apple, Amazon, and Microsoft.
And what you see is that over time, gold has no way to compete with an asset that gives you this reinvestment potential. This exponential rise at the end of this chart is compounding working its magic, and is why investments like stocks can make such great long term investments.
Commodity Prices Less Than Zero
We wrote about negative crude oil prices recently. Now, we have read that, due to closures at meat packing plants, companies like Tyson are slowing or stopping their buying. Farmers may be forced to destroy their animals.
Think about that. Alive, an animal incurs costs due to feed and labor. With no buyer, it is better to kill the mature animals than to keep them alive. If there were a market to express prices, the price of such animals would be below zero.
The virus lockdown may not have provided the magic to make pigs fly. But it can cause something unprecedented: commodity prices below zero
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Gold As A Diversifying Investment
In general, gold is seen as a diversifying investment. It is clear that gold has historically served as an investment that can add a diversifying component to your portfolio, regardless of whether you are worried about inflation, a declining U.S. dollar, or even protecting your wealth. If your focus is simply diversification, gold is not correlated to stocks, bonds, and real estate.
How To Invest In Gold And Silver
Lastly, real quick on how to invest in gold and silver. Those last few slides we tried to show why we dont believe gold, silver, and other commodities really deserve a big allocation to your portfolio.
That said, we completely understand the desire to have some amount in gold. And if it makes you feel better knowing you have something tucked away in gold, then its good to do.
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A Brief History Of Gold
In order to fully understand the purpose of gold, one must look back to the start of the gold market. While gold’s history began in 2000 B.C, when the ancient Egyptians started forming jewelry, it wasn’t until 560 B.C. that gold started to act as a currency. At that time, merchants wanted to create a standardized and easily transferable form of money that would simplify trade. The creation of a gold coin stamped with a seal seemed to be the answer, as gold jewelry was already widely accepted and recognized throughout various corners of the earth.
Following the advent of gold as money, its importance continued to grow throughout Europe and the U.K., with relics from the Greek and Roman empires prominently displayed in museums around the world, and Great Britain developing its own metals-based currency in 775. The British pound , shillings and pence were all based on the amount of gold that it represented. Eventually, gold symbolized wealth throughout Europe, Asia, Africa, and the Americas.
Is Buying Gld Shares The Same As Buying Gold
From the average investor or trader’s standpoint, buying GLD shares is the same thing as buying gold. GLD shares will replicate exposure to gold prices, minus expenses related to storing the gold and trading GLD shares. However, it is important to understand that GLD shares do not give you ownership of physical gold. You can’t trade in your GLD shares for the gold bars, for example.
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Advantages To Buy Gold Coins
Gold and other hard metals have always been a time-honored part of traditional investment plans. Heres why:
- Gold tends to go up when other investments decline, providing a stabilizing effect for your portfolio.
- Gold is a bulwark against inflation.
- You dont have to pay capital gains tax until you sell.
- Nobody has to know you have it if that matters to you.
- In worst-case financial scenarios, such as massive currency devaluation, you can use gold and silver to buy and sell. That may sound crazy but it has happened in other countries.
Gold Or Silver Which Is The Better Investment
Lets start with a price appreciation comparison between gold and silver since 1980.
| Value | |
| 140,970 | 92,852 |
Clearly gold is the winner so far. But will it be winner for next 30 years? Lets find some more reasoning behind gold investment or silver investment.
Silver is for risk-takers. It has higher highs and lower lows. The future of silver is entirely speculative. Some expect silvers value to rise dramatically in the coming years, due to silvers increasing value in green energy projects .
Some claim this is silvers lowest low for a while, a sort of calm before the silver storm. In bullish times, like today, silver prices tend to climb faster than gold.
Many analysts have declared silver as the investment of the decade and believe extreme increases in silver value are imminent. Despite these positive assumptions for silver, no one can be sure of how its value will fare in the upcoming years.
As for gold, its a much more stable investment. Golds value is generally on the rise, and its occasional dips tend to be limited. Gold is an excellent hedge against inflation, because as inflation rises and the dollar declines, golds value increases, in response.
Though gold is more likely to earn you stable returns, those returns tend to be slower than they might be with silver.
If you cant decide whether youre a high or low risk-taker, take a closer look at the advantages of investing in each metal.
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Difference #: Silver Requires Much More Storage Space
All those affordability advantages we just outlined come with a catch: it takes a LOT more space to store silver than gold.
At current prices, the same dollar investment will get you roughly 80 more ounces of silver than gold. On top of that, most silver is a lot less dense than goldpure silver is 84% larger in volume than pure gold. This means silver takes up as much as 128 times more space than gold for the same dollar value!
Here are some practical examples of that difference. At current prices
- You can hold $50,000 worth of gold in one handbut it would take about 10 large shoe boxes to hold the same dollar amount of silver.
- $50,000 worth of gold weighs about 2.6 poundsbut the same value of silver weighs about 189 pounds!
- You can store roughly $170,000 of gold in a small safe deposit box, but that same space will only hold about $2,300 of silver.
Its relatively easy to hide some gold coins in a sock drawer or cookie jar, but those same hiding places are impractical for the same investment in silver. Whether you buy coins or bars, youll need a lot more space to store silver than gold.
And because it requires more space, the fees for professional storage are higher with most depositories.
This difference applies to transporting physical silver as well: it may be more difficult, expensive, and cumbersome.
- Investor Implication: Gold takes up much less storage space than silver, is cheaper to store, is lighter and less cumbersome to transport, and doesnt tarnish.
Should I Buy Gold Or Silver
Gold gets all the attention in the precious metals market. And rightly so its a stable investment that has a solid track record of holding its value and increasing in price over time. But did you know that silver offers some interesting investment qualities as well?
There are many reasons why people invest in either silver or gold, and each commodity has its own pros and cons. To help you decide which is the best precious metal for you, weve brought together some of the strengths and weaknesses of both to help you answer the question: Should I buy gold or silver?
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What Is The Silver Price Trend
To give you a better idea of this volatility, lets see what was the price dynamics for silver in 2020 and 2021:
- In 2020, in the period from mid-March to mid-August, silver skyrocketed 142.8% in just 4.8 months!
- In 2021, silver started the year at $27.27 an ounce before reaching an eight-year high at nearly $30 and falling back to $24 an ounce in late March.
According to commodity strategists, the silver price rally is likely to continue, even though the third wave of Covid-19, largely caused by the Delta variant, has taken the extreme bullish silver scenario off the table for now.
The rally can last as long as the world remains concerned about the impact of Covid-19 mutating and concerned about the impact of Covid on the services industry. Both of these concerns can sustain investment demand at high levels, Max Layton, managing director of Commodities Research at Citi Global Markets, said.
Investment Returns: Gold Vs Treasuries
We are going to get into long term discussion in the next couple slides. But I just wanted to put this in here to show the long term impact if you used treasuries as your safe investment, instead of gold.
While gold has outperformed by about half a percent per year, you had to weather some pretty big moves up and down.
Specifically, look at the differences in max drawdowns over this period. If gold is going to make up a significant part of your portfolio you know its not unusual for a retiree to have 30 or 40% treasuries if gold was 30 40% of your portfolio and it fell 60%. Thats pretty scary.
So when I look at this, if I have to pick one of these assets to be the safe part of my portfolio, its a pretty easy choice. A little less return, but way more protection of the value of your investment.
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Bgasc: Buy Gold And Silver Coins
With thousands of positive customer reviews, its not hard to realize why BGASC is an A+ BBB accredited business. They offer free shipping on orders $99 and up, and every order is insured while in transit moreover, they always ship your order the next business day.
They are one of the largest coin and bullion dealers in the US and sell nearly every type of US coin ever made. They also have a large selection of mints from other countries, such as China, Mexico, and Canada.
Best Place And Way To Purchase Copper & Platinum
As in the case of gold and silver purchases, customers who intend to buy copper and platinum will benefit more from making their purchases online than at a local coin shop. Purchasing copper and platinum from an online vendor entitles them to the same advantages offered on online gold and silver orders such as easier accessibility, better pricing and more privacy. Furthermore, at JM Bullion, the transaction process remains the same regardless of which precious metals the customer chooses to purchase. While we respect the individual preferences of our customers, we would like to warn customers who intend to purchase copper and platinum locally that the availability of these precious metals will be dependent on the specific inventory of each coin shop.
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