Gold has long been considered the granddaddy of all precious metals, but many investors feel that silver is an especially strategic investment in the current market, and we agree. However, each investor should carefully consider the following differences between gold and silver:
Portability vs. Tradability
Because of its higher value and denser composition, gold is obviously far easier than silver to conceal, transport and store. ($25,000 oz of gold takes roughly the same space as $350 in silver.) On the other side, silver is generally considered to be easier to trade, barter, buy, and sell. Because silver coins can be worth between $5-25, they are far superior for spending and bartering on an everyday basis, or buying and selling in smaller portions.
Lower Premium vs. Ease of Liquidation
As a rule, smaller coins are easier to sell to other investors and coin shops, or to use in a trade/barter situation. You will typically pay more over the spot price to buy these coins. On the other hand, larger, more expensive bullion items (e.g. 10 oz gold bars) can be purchased with much lower premiums over the spot price, but can present more of a challenge when you are looking to sell it. Before you buy, ask yourself, “Why am I buying precious metals, and how do I expect to be selling it?”
What about Counterfeiting?
Gold, because of its higher value, is generally more susceptible to counterfeiting. This creates a higher standard of care when buying and selling gold coins.
Between 2010-2016, the price of gold has averaged between 60-80 times the price of silver (60:1-80:1 ratio). Most analysts believe that historically the price of gold ought to be much closer to the price of silver, as low as 30:1 or even 20:1 or less. While there are many conditions which affect this price ratio, many analysts believe that this ratio will be decreased in the future.
Silver as an Industrial Commodity
Silver’s dual purpose as an industrial metal and a precious metal creates special pro’s and con’s. Because of silver’s use in manufacturing, the price of silver can be sensitive to the ups and downs of manufacturing. That fact, combined with silver’s smaller price per oz, can make the silver market can be more volatile than gold. Silver is often considered the double-edged investment since its industrial use gives it strength in times of economic prosperity, while its precious metal use gives it strength as a hedge against a failing US Dollar and weakening global economy.
What about Palladium and Platinum?
Because of their highly specialized industrial use, palladium and platinum are not common choices for new investors. Platinum and palladium can be strategic investments in many cases, but investors should carefully research the history and background of platinum or palladium before purchasing. Investors should also be aware that some of the traditional outlets for the retail of precious metals (pawn shops, coins shops, eBay, etc.) may not be as conducive to purchasing platinum or palladium as they would with gold or silver.