While both gold and silver are great investment options, deciding between the two is easier said than done.
The world is seemingly dominated by paper fiat currencies conjured seemingly at will by central banks around the world. The one thing all fiat currencies have in common is that their intrinsic value always, without exception, eventually spirals down to zero.
Gold and silver, on the other hand, have been considered valuable for roughly five millennia. Due to their relative scarcity and unique physical properties, they serve as a store of wealth, a medium of exchange, and a unit of account.
Continue reading to learn what money is versus currency, and how precious metals compare.
What are the desirable properties gold, silver, and other precious metals possess? For starters…durability, conductivity, relative softness, and pliability, along with being relatively heavy. Both metals are intrinsically valuable and are said to insure against the cycles of financial crises we all too often experience these days.
The characteristics that make these precious metals valuable and a long-trusted store of value lie in the fact that both gold and silver are portable, durable, divisible, and fungible (or interchangeable). Gold and silver, whether in coin or bullion form, are considered to be real money as opposed to currency, whether it be in paper or cashless form.
History of Gold and Silver as Investments
August 15, 1971 is a significant date in history because it marks the day the United States ended the dollar’s convertibility into gold. Gold and silver were no longer used to back the nation’s currency.
Fiat currencies, such as dollars, euros and yen are only backed by the good faith and confidence in the sovereign government that issues that particular paper. In essence, most of what the vast majority of people consider to be money is really currency without an intrinsic value.
Gold and silver, on the other hand, will always hold at least their spot price in value regardless of a country’s financial landscape.
How are Gold and Silver Fairing?
As a safe haven, silver is growing steadily in appeal. Silver also has a myriad of valuable industrial uses in electronics, solar power, semiconductors, etc. Silver even has antibacterial properties for medical use.
Gold remains a hedge against turmoil in the markets. Gold is also in higher demand as an alternate currency by central banks, investment banks, and individual investors. It has limited industrial uses.
The historical ratio between the value of these two precious metals has been roughly 15 or 16 to 1 in favor of gold. This ratio measures how much silver it takes to purchase one ounce of gold. Market manipulation and other factors have moved that ratio to roughly 75 to 1 in gold’s favor.
Which Investment is for Me?
Silver is the more affordable precious metal for the investor on a budget. Since it is more populous in nature than gold, its spot price is much lower. However, silver should not be considered a second rate commodity. Many experts see silver as a more marketable option because of its smaller price tag which can be used for smaller purchases should the need arise in the future.
Gold is a more expensive precious metals investment option, but it can be used for larger transactions if need be. However, gold does not have to be bought in large amounts all at once. The average individual can accumulate gold by purchasing in tenth ounce sizes. The total amount will soon begin to add up.
Overall, investing in silver is easier for immediate purchasing and is growing in appeal as a portfolio protector. Gold remains king as a store of value in the face of massive money printing by central banks.
Regardless of which you choose, silver and gold can both be used as great investments in the face of potential economic uncertainty.
Provident Metals has a wide inventory of both gold and silver bullion to get you started with investing.