Jan 2024


Jan 2024

Gold vs. Silver Investments: Which is Better?

By StoneX Bullion

When it comes to investing in precious metals, gold and silver reign supreme. But which of these investments is better? If you’re wondering whether to put your money in gold or silver, we’re here to help you make that decision.

In this guide, we’ll talk about the differences between investing in gold vs silver, looking at their volatility, affordability, industrial demand, storage, and relationship to the broader market. With all of this information in mind, you can better discern which precious metal is most suitable for your investment.

Differences between gold and silver investments

The best way to decide whether to invest in gold or silver is to understand the differences between these two metals from an investment perspective.

Below, we examine these differences according to important investment considerations, such as volatility, price, relationship to other markets, and other important factors.

Gold is less volatile than silver

First, let’s talk about volatility.

Volatility measures how much an asset’s price fluctuates over time. Volatile assets experience significant price fluctuations that make them less predictable. As a result, they can carry more investment risk.

In the world of precious metals, silver prices tend to be a lot more volatile than gold. This is largely due to its lesser value and greater susceptibility to market fluctuations. Although the price of gold can fluctuate in the short-term, it’s known to maintain its value over time (check the live price of gold on our website).

Volatility is an important consideration for anyone who wants to invest in silver or gold. If an asset is known to be volatile, investors will either choose not to invest in it or demand a higher return to compensate for the extra risk. Less volatile assets, on the other hand, make more attractive investments even if their returns are lower.

Bottom line: Silver is more volatile than gold but can offer higher returns, albeit with greater risk. If you’re prepared for a wild, volatile ride and can take the extra risk, then silver can be a good investment for you. On the other hand, gold offers greater stability but with potentially lower returns. If you prefer less risk and more peace of mind, investing in the yellow metal may be the best option for you.

Silver is more affordable than gold

For many investors, the affordability of an asset is a major drawcard. If this sounds like you, you’ll be happy to note that silver is more affordable than gold - but it still has many of the same advantages that come with investing in gold.

This means investors can benefit from the same perks of investing in gold, but at a lower price. This includes:

  • Tangible asset: Just like gold, buying physical silver offers you a hard asset that you can hold in your hands.
  • Form of money: Silver can be easily liquidated into money, and unlike paper currency, cannot be printed in excess and won’t depreciate in value.
  • No counterparty risk: When you invest in silver (or gold) you don’t have to rely on another party to come through on a contract or promise.

Bottom line: Investing in silver can offer you the same benefits as investing in gold, but at a lower price. This can make it a more affordable investment for the average investor or people just starting out.

Gold is easier to store than silver

An important consideration for anyone who wants to invest in precious metals is storage. If you’re choosing between gold or silver, it’s good to be aware that silver will require a lot more storage space.

Let’s say you have $1,000 to invest in gold or silver. At today’s gold prices, you’ll end up with around half an ounce of gold. If you choose to invest in silver, you’ll get around 43 ounces.

Another thing to note is that gold is denser than silver. This means that one ounce of gold occupies a smaller amount of space than one ounce of silver. Basically, you’ll not only get more ounces of silver for the same dollar investment, but those ounces will also take up more space than the same weight of gold.

So while it can be easy to safeguard gold in a small drawer, safe, or secret hiding spot, it can be more difficult to do this with silver. Whether you’re investing in 1 oz Vienna Philharmonic silver coins or 1 kilo silver bar, silver will demand more storage space than gold. This might not be an issue if you plan to store your precious metals at home, but if you’re having it professionally stored then fees are likely to be higher. You can also expect to pay more for transporting silver than gold. Larger volumes = larger packages = more expensive transportation.

Another important implication for storing silver vs gold is that, at some point, silver will start to tarnish. This means your silver coins and bars should be safely stored in a dry place away from all elements. Gold, on the other hand, can be easier to store as it will not tarnish from being exposed to the elements.

Bottom line: Gold requires less storage space, making it easier and more affordable to store and transport. Silver requires more storage space, which can make it more costly to store and transport. Because silver will tarnish over time, storage must be carefully considered to maintain its value and prevent tarnishing.

Read more: What is the Proper Way to Store Gold?

Silver has more industrial uses than gold

One of the biggest differences between silver and gold is their industry applications.

Silver is largely considered to be the most versatile precious metal with uses across myriad industries and technologies, including phones & tablets, solar panels, kitchenware, medicines, cars, and more. More than half of all silver will find its way to some kind of industrial use, while gold is rarely used beyond jewelry and investment purposes.

Instead, gold is used more as a store of value. While it still has some industrial applications, this only accounts for about 12% of total gold demand with 90% going to investments and related sectors.

Because of its wide use of industrial applications, silver is in higher demand but also more sensitive to economic changes as a result. When economies are booming, demand for silver increases and its price skyrockets. When the economy slows down, however, silver’s price tends to go with it. Gold moves oppositely, as we’ll explain in the following section.

Bottom line: Silver has more industrial applications than gold, while gold is mostly used for jewelry and investments.

Gold is less affected by economic shifts

Finally, let’s take a look at how gold and silver tend to perform in relation to the broader market. This is an important consideration that every investor should be aware of before choosing between gold or silver.

Gold has historically been known as a ‘countercyclical investment’. This means that it tends to move in opposition to other mainstream assets like stocks and bonds. When the stock market is not performing well, investors tend to flock to gold and increase its price. On the other hand, when the market is performing well, more investors sell gold and invest in assets linked to the economy. (Read more: How to Invest in Gold as an Inflation Hedge)

Because of this countercyclical movement, many investors choose to hold gold in their portfolio ready to liquidate during economic downturns or rising inflation. For example, a recession is a good time to buy stocks but a bad time to sell them. During these periods, investors will liquidate their gold to buy undervalued assets while getting to retain their own holdings.

Unlike gold, silver moves more in line with the economy. This is likely due to its many industrial applications. When the economy is booming, industries will be buying lots of silver for manufacturing. When the economy slows down, there’ll be less demand for silver and the price will be driven down.

Bottom line: Gold is a better investment for a diversified portfolio as it moves in opposition to stocks, bonds, and commodities. It’s also less affected by economic declines. Silver, on the other hand, is a less powerful diversifier than gold and tends to move with the overall economy a lot more.

Ways to invest in gold and silver

If you’re looking to invest in gold and silver, there are many ways that you can do so. We always recommend buying physical metals where possible, however there are other investment options available for those with different needs and requirements.

Below are three different ways you can invest in gold and silver.

1. Buy gold and silver bars or coins

The best way to invest in gold or silver (and all other precious metals) is to buy them in their physical form. These are tangible assets that can be held in your hand, stored safely in your home or a safety deposit box, and cannot be hacked, erased, or destroyed in a technology failure.

You can buy pure silver and gold coins or bars in various sizes and price points that suit investors with all sorts of budgets. For example, you can invest in a 1g gold bar, a 1kg gold bar, and all sorts of sizes and weights in between.

If you do decide to buy physical gold or silver, make sure you consider storage, transportation, and insurance costs where applicable.

2. Buy exchange-traded funds (ETFs)

Also known as paper gold or paper silver, ETFs allow people to invest in gold or silver without having to buy and store a physical asset. These are essentially shares kept in a traditional brokerage account.

There are some downsides to investing in silver or gold ETFs over the physical metal. Firstly, ETF investors don’t own the actual metal. This means they are not in possession of a tangible asset. Secondly, gold ETFs may not perform as well as physical gold during an economic downturn.

3. Buy mining stocks and funds

Another way to invest in gold or silver is to own a share of companies that mine for gold and silver or invest in mutual funds that hold portfolios of these mining companies.

Summary: should you invest in gold or silver?

When it comes to investing in gold or silver, neither investment is considered ‘better or worse’. Both silver and gold are valuable commodities and safe haven assets that can protect investors during periods of economic booms and busts.

In the end, the decision of whether to invest in silver or gold will depend on your budget, risk tolerance, portfolio, market position, and needs. In short:

  • Gold is more expensive but can provide a better return in the long-term, while silver is more affordable but has lower returns.
  • Gold is easier to store than silver, won’t tarnish, and may cost less in storage and transportation fees.
  • Silver has far more industrial uses than gold and can experience a boom when economies are healthy.
  • In the long-term, both gold and silver make excellent stores of value.

For the best portfolio diversification, consider investing in both gold and silver to be prepared for uncertain economic times. When times are good, your silver investments will boom. When times are bad, gold will come through as a solid hedge. If you’re still unsure, speaking to a financial advisor can help you best understand which investment is suitable for your portfolio.

Where to buy gold or silver

Whether you’ve decided to invest in gold or silver or both, it’s important you choose a trusted dealer for your investment. At StoneX Bullion, we’re recognized by the London Bullion Market Association (LBMA) for our reliability and trading practices. This differentiates us from competitors who haven’t been granted this status and offers our investors peace of mind.

We also offer competitive prices by rarely using intermediaries. We buy our stock straight from the producers to save you from paying too much for your investments. Because gold and silver prices constantly fluctuate, you can monitor price changes directly on our site so you can make the most of your money.

Whether you’re buying gold coins or bars, silver coins or bars, or choosing to dip your toes in another precious metal like palladium or platinum, you can find it all at StoneX Bullion. Start browsing our investment-grade precious metals and build your investment portfolio today.