Not only is gold worth significantly more per ounce than silver, but it's also the denser of the two metals, making a specific volume of gold worth much more than an equal volume of silver. The advantage of silver over gold is that you can get all of these same benefits, but at a much lower cost. Your financial insurance is now more affordable. This is why silver is called “the gold of the poor”.
In this way, silver works like gold as an investment and performs a similar function as a safe haven. However, silver is an industrial metal and an investment metal, which significantly affects the evolution of its prices and its prospects. It's natural to compare silver to gold as an investment. They share the same strengths of tangible assets, counterweights to stocks and stock markets, safe havens against socio-political shocks and hedges against inflation.
However, the two precious metals have several important differences. In addition, investors are informed that the performance of previous investment products does not guarantee future price appreciation. Gold is commonly used as a store of value and has relatively limited industrial applications, Agrawal says. It's also still relatively cheap, especially compared to gold, presenting investors with more buying opportunities.
You'll avoid the headaches involved in physically storing and selling gold and silver, and you'll also be able to earn dividends. By contrast, central banks have more than 34,000 tons (1.090 million ounces) of gold in official reserves. Therefore, the price of gold moves as investors assess their own investment needs, to what extent they want security and the return expectations of other asset classes, such as stocks and bonds. At current prices, the same investment in dollars will allow you to obtain approximately 80 ounces more of silver than gold.
Investors not only drive up gold prices in a bear market, but the yellow metal is relatively isolated from the slowdown in economic activity because industrial uses are very limited. Therefore, silver coins and ingots should be stored in a dry place without exposure to the elements, a concern that gold does not have. The relatively high price of gold per ounce makes it easier for investors to store value compared to silver, making it cheaper to store an amount equivalent to the value in dollars. Gold is a safe asset, says Mahesh Agrawal, deputy director of specialized solutions at Acuity Knowledge Partners, a business intelligence provider.
For those reasons, it's probably wise for novice investors to stay away and stick with old gold if they want a safe haven from stock market movements. These factors may affect gold, which also has its industrial uses, but in general, gold is based more on investor confidence. Despite its affordability and industrial uses, silver has maintained a fairly low profile, especially compared to gold. Let's look at the gold-silver ratio, which tells you how many ounces of silver you would need to buy a single ounce of gold.