Silver is more volatile, cheaper and more closely linked to the industrial economy. gold is more expensive and better for diversifying your portfolio in general. One or both can take a place in your wallet. Arguably, the best use of gold as an investment is to mitigate portfolio risk.
Both silver and gold can function as safe-haven assets, but gold tends to have a better track record for long periods of time. That said, in shorter periods, the specific dynamics of each market end up being more important for their respective returns. Regardless of which one you buy, remember that neither asset produces cash flow, so it's best for long-term investors to take a buy-and-hold approach with a portfolio of profitable and growing stocks. Silver is much cheaper than gold, making it more accessible to small retail investors.
For those just starting to build their portfolios, the cost of silver can make it a better investment option. Gold is more expensive to buy than silver, giving you less flexibility when selling, although smaller gold coins are relatively affordable. However, remember that VAT (currently 20% in the UK) will be charged for your sales, so to make money with silver you must take that into account when choosing when to sell. When it comes to gold, it can be said that it is relatively protected from a decline in economic activity because its industrial use is very limited.
On the other side of the coin, gold is a more stable investment, but that stability comes with compensation. The historical chart below shows that the price volatility of silver can sometimes be two or even three times greater than that of gold on a given day. Both gold and silver are extremely liquid assets, seen by all as a valuable commodity, and even by many as a real currency. The idea is that both gold and silver can be good portfolio diversifiers, especially when viewed as natural complements to each other, which basically means that gold's resistance can help balance silver's increased volatility.
Of course, this does not take into account an investor's personal preferences or feelings about the future prospects for both gold and silver. The other main consideration is that, since silver is worth less than gold, you would have to buy much more to match a corresponding investment in gold. So just when you want to realize part of the value of your silver to help bolster your finances, the price you receive can be disappointing. Sure, you can buy gold by the gram, or even by pennyweight, but buying smaller quantities increases your total cost, making these investments less advantageous.
Some of the most popular precious metal ETFs include SPDR Gold Trust (GLD), iShares Gold Trust (IAU) and iShares Silver Trust (SLV). British legal tender gold coins also include the Queens Beasts and Lunar series, Gold Standard, Royal Arms and Gold Soberigns and Britannias series. If you are interested in gaining exposure to the safe-haven characteristics of silver and gold investments, but also want to expose yourself to the growth offered by the stock market, you can find a good combination by investing in mining companies. The correlation between silver and inflation is also high, says Agrawal, but not as strong as that of gold.
Although the possibility that the price of silver will rise at a faster rate than that of gold, the market moves in mysterious ways and growth is never guaranteed. These wide variations mean that silver bars are best viewed as a long-term investment, with a bullion investment strategy that allows you to avoid market lows and sell during peaks. .