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Why Invest in Silver Rather than Gold?

By Edited Nov 13, 2013 0 0

Why invest in silver rather than gold?

The answer to this question is actually simpler than you may think. It lies in the potential upside multiple, you could make on your investment.

If we look at the ratio between the two precious metals, we can find that one share of gold would be equivalent to many shares of silver.

We can buy silver coins. This is usually done in one hundred or one thousand dollar bags, these set price bags are widely traded and the spot price for the metal sets the price.

There are also art deco bars and rounds that are minted by many different companies for sale to the general public. Official government mints also strike precious metal coins as well and again, these are sold on to the open market. 

The options above are aimed more at the non-industrial uses for silver and gold and make up only a very small portion of the demand for these precious metals. Each metal has its own calling with different commercial and non-commercial uses. 

However silver is currently considered to have more uses and demand than gold in manufacturing. Where computers and automotive industries, as well as the photography field, all placing a strong demand on available silver. 

Global economic times have also made the less expensive metal more popular in jewellery (due to it often being considered more of an inferior good when compared to that of Gold). As the harsh economic times have forced most to try to cut back on non essential items. Many people will now opt for a one hundred dollar silver necklace, rather then shelling out two thousand for a gold one.

Currently there are several economic indicators in place to show silver can prevail as the leading investment in the metals market.

There are fewer potential downfalls for this metal as well. Gold always stands the risk that any large country, can suddenly decide it needs to raise cash and simply flood the market. Selling off a large hoard of gold reserves to raise cash, is not unheard of in history. It has certainly happened on more than one occasion.

If you are invested in this precious metal you will quickly find out that the general public cannot absorb the surplus fast enough and that the price of gold will be likely to tumble.

Silver on the other hand has much less downside risk. Without governments sitting on huge stockpiles and the market constantly demanding more and more silver. A crash of this metal is considered to be highly unlikely.

So when asking," Why Invest In Silver Rather Than Gold?" The answer is that, silver has an positive upside potential and less systemic risk. The old supply and demand theory is hard at work. Teaching us a valuable lesson, yet again.



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