Silver and gold are two of the most well known precious metals. But which one is the better investment? It depends on your budget and your investment goals. Below is a brief comparison of gold and silver as investments.
Value
Gold has always been more valuable than silver. However, its relative value has varied greatly over the years.
The gold/silver ratio is often used to determine the price of gold vs silver. It is calculated by determining how many ounces of silver are equivalent to an ounce of gold. Currently, an ounce of gold is worth just under 90 ounces of silver. However, during the pandemic the gold/silver ratio dropped below 70, while in 2011 recovery from the recession drove silver prices up so that the gold/silver ratio was just over 30.
As of April 2024, an ounce of silver is about £21, while an ounce of gold is over £1,815. This clearly makes silver a more affordable investment for everyday people. However, if you want to invest a lot of money, you have to buy a lot more silver than gold. This is why gold is typically more popular among those investing several thousands.
Scarcity
What makes gold and silver so valuable? Historically, these metals were prized for their corrosion resistance, which was why coins and other treasures were made from them. There was also a value in their rarity – both metals have long been difficult to find and extract. Even with the advent of globalisation and new mining technology, this remains the case. Especially as most of the Earth’s reserves of gold and silver are believed to have already been mined.
Gold is more scarce than silver. About 244,000 metric tons have been discovered to date. 182,000 metric tons of this has already been mined and is in circulation, while 57,000 metric tons remain in underground reserves.
Calculating the total silver on Earth is much harder. About 1.74 million metric tons is believed to have already been mined, while the amount left in the Earth’s crust is less certain. This might sound like a lot of silver, but it is still quite a small amount compared to more common metals (the total amount of iron ore mined is believed to be about 3.43 billion metric tons).
Volatility
Both gold and silver have fluctuated in value over the years, although in the long run both metals have mostly risen in value. Of the two, gold has proven to be the most stable with very few major dips or spikes.
In 1970, gold was around £15 per ounce. By 1990, it was worth £200 per ounce. It soared to £1150 by 2011, dipped to £716 in 2015, and has since climbed back up to £1815 in 2024.
Silver has proven to be more volatile over the years. While its value largely follows the price of gold, silver is used more heavily in more everyday products like medical equipment and appliances and cars, and so can be more affected by market crashes like the pandemic.
To give you a comparison, in 1970, silver was about 70p per ounce. By 1990, it had risen to £2.10 per ounce – but this was not a gradual increase and the price of silver briefly shot up to £17 per ounce in 1980 before crashing due to the Hunt brothers’ stockpiling. Silver prices rose steadily to over £29 per ounce in 2011, before plummeting to just under £10 in 2015. The price has since risen back up to £21 in 2024, but not without a few smaller dips along the way (dipping back down to £11 during the pandemic).
Silver is therefore a riskier investment short term. However, it is also an attractive high growth investment for those that buy at the right time.
Which is the better investment?
Gold is generally better suited for those that want stability. It does require a bigger upfront investment due to the cost of gold. However, the benefit is that you don’t have to buy a lot of gold to make a lot of money.
Silver is more volatile, but consequently can lead to higher short term gains than gold if you buy at the right time. Silver is also more affordable than gold. You do however have to buy a lot more of it to make a lot more money (as much as 90 silver bars for the equivalent value of a single gold bar).
Both are worth investing in for a balanced portfolio. You can purchase gold and silver from online bullion dealers. The best dealers are able to offer secure delivery and storage, as well as offering a buyback guarantee to make selling easy.
