Buying Gold Vs Silver !!EXCLUSIVE!!
Mining stocks allow you to have leverage on the price of gold or silver, so a profitable miner will become much more profitable as the price of the metals rise. But if investing in individual stocks is too risky and time-intensive, you can buy an ETF that owns miners and diversify your stake.
buying gold vs silver
How have gold and silver performed over time? Despite their reputations, not all that favorably, says Robert R. Johnson, PhD, CFA, CAIA, professor of finance, Heider College of Business, Creighton University.
Investors thinking about investing in gold or silver should then carefully consider whether it really makes sense for them. It may well make sense in the short term or when specific imbalances exist in the respective markets for the precious metals.
Both silver and gold can function as safe haven assets, but gold tends to have a better track record over long periods of time. That said, over shorter periods the specific dynamics of each market end up being more important to their respective returns. Regardless of which you buy, remember that neither asset produces cash flow, so investors might be best served in the long term to take a buy-and-hold approach with a portfolio of profitable and growing stocks.
Investing in precious metals comes with some benefits over investing in stocks, such as being a hedge against inflation, having intrinsic value, no credit risk, a high level of liquidity, bringing diversity to a portfolio, and ease of purchasing."}},"@type": "Question","name": "What Are the Best Ways to Invest in Precious Metals?","acceptedAnswer": "@type": "Answer","text": "The best way to invest in precious metals is either to buy the metal outright and hold the physical form or to purchase ETFs that have significant exposure to precious metals or companies involved in the precious metals business.","@type": "Question","name": "What Is a Disadvantage of Investing in Precious Metals?","acceptedAnswer": "@type": "Answer","text": "Precious metals have no cash flow so an individual will receive no income. If an individual holds the outright metal, there is also a storage cost associated with the investment."]}]}] Investing Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All Simulator Login / Portfolio Trade Research My Games Leaderboard Economy Government Policy Monetary Policy Fiscal Policy View All Personal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All News Markets Companies Earnings Economy Crypto Personal Finance Government View All Reviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All Academy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All TradeSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.InvestingInvesting Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All SimulatorSimulator Login / Portfolio Trade Research My Games Leaderboard EconomyEconomy Government Policy Monetary Policy Fiscal Policy View All Personal FinancePersonal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All NewsNews Markets Companies Earnings Economy Crypto Personal Finance Government View All ReviewsReviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All AcademyAcademy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All Financial Terms Newsletter About Us Follow Us Facebook Instagram LinkedIn TikTok Twitter YouTube Table of ContentsExpandTable of ContentsGoldSilverPlatinumPalladiumFilling Up Your Treasure ChestA Good Investment?Precious Metals RisksPrecious Metals FAQsThe Bottom LineFutures and Commodities TradingMetals TradingA Beginner's Guide to Precious MetalsByBarclay Palmer Full Bio LinkedIn Twitter Barclay Palmer is a creative executive with 10+ years of creating or managing premium programming and brands/businesses across various platforms.Learn about our editorial policiesUpdated May 25, 2022Reviewed byThomas Brock Reviewed byThomas BrockFull BioThomas J. Brock is a CFA and CPA with more than 20 years of experience in various areas including investing, insurance portfolio management, finance and accounting, personal investment and financial planning advice, and development of educational materials about life insurance and annuities.Learn about our Financial Review BoardFact checked byKirsten Rohrs SchmittGold and silver have been recognized as valuable metals and were highly coveted by ancient civilizations. Precious metals still have their place in a savvy investor's portfolio in modern times. But which precious metal is best for investment purposes? And more importantly, why are they so volatile?
Gold and silver prices move significantly year to year, so the best way to get a general gauge of the prices of these metals is to look at semi long-term charts. Below we have the gold and silver price charts dating from January 2000 to the time of this writing (February 15, 2012):
What we can take from the above charts is that gold, as of late, has been significantly more expensive than silver. This price relationship between gold and silver exists despite the fact that there is actually much more above-ground gold in existence than above-ground silver; current estimates place above-ground gold at 5 billion ounces and above-ground silver at 450 million ounces ( _vs_Gold.html).
The ratio between the gold and silver spot prices is called the gold/silver ratio, and is often used by investors to determine if either of the metals is undervalued as compared to the other. The gold/silver ratio measures how many ounces of silver you can buy with one ounce of gold. Below you can see the 10-year gold/silver ratio chart:
Both gold and silver are extremely liquid assets, viewed by all as a valuable commodity, and even viewed by many as an actual currency. Investors can buy physical gold and silver online 24/7/365 from JMBullion.com, as well as countless other precious metal retailers.
The final topic we will discuss is the difference between the retail markup on physical gold and the retail markup on physical silver. As a precious metals investor, you always want to buy metal as close to the current spot price as you can, else the metal price has to increase significantly just for you to break even.
Now, buying metal exactly at the current spot price is all but impossible for an individual investor, as the companies you buy from make their money on their buy/sell margins, so they have to add a tiny premium just to stay in business (with the exception of 35%, 40%, and 90% silver coins, which we discuss in our next article). However, by selecting the right products and quantities, you can make sure the premium you end up paying is as little as possible.
In general, if you are spending any amount up to $1,500, silver is going to have a lesser markup than gold. At present retail prices, $1,500 would buy you just over 40 ounces of silver. At that quantity, most companies will charge a premium of about $2.25 per ounce. With silver currently sitting at about $33.50/ounce, a $2.25 premium per ounce represents a 6.7% premium over spot.
In contrast, the key advantage of buying physical gold (such as bars and coins) is that you own the gold. Furthermore, you own an asset that can be stored outside the financial system, which reduces counterparty risk.
Counterparty risk is the risk that the other party in an agreement will default or fail to live up to its obligations. When investors buy gold ETFs, they are relying on financial institutions to deliver on their obligations.
While both gold and silver have attractive features, gold is the better investment for the average precious metals investor. Gold has a much larger liquid market that is driven mostly by investment and jewelry demand. The price of gold is less volatile than that of silver, too.
Meanwhile, silver is more speculative and has a stronger relationship to economic activity. This is because silver has many industrial uses. As such, silver can be attractive during down cycles when the price of the metal is cheap.
There are two main methods of investing in gold: paper and physical. Paper gold is for portfolio protection, used to diversify portfolios, which usually brings balance in times of market uncertainty. Physical gold is to protect your purchasing power, or as discussed earlier, to lock in your purchasing power.
When investors are ready to cash out their investment, they must also consider the liquidation process. Liquidating physical gold and silver may require shipping the metals to a reputable dealer. If the dealer you purchased from does not offer a buyback program, you will have to find another to purchase your metals. 041b061a72