Difference #: Silver Requires Much More Storage Space
All those affordability advantages we just outlined come with a catch: it takes a LOT more space to store silver than gold.
At current prices, the same dollar investment will get you roughly 80 more ounces of silver than gold. On top of that, most silver is a lot less dense than goldpure silver is 84% larger in volume than pure gold. This means silver takes up as much as 128 times more space than gold for the same dollar value!
Here are some practical examples of that difference. At current prices
- You can hold $50,000 worth of gold in one handbut it would take about 10 large shoe boxes to hold the same dollar amount of silver.
- $50,000 worth of gold weighs about 2.6 poundsbut the same value of silver weighs about 189 pounds!
- You can store roughly $170,000 of gold in a small safe deposit box, but that same space will only hold about $2,300 of silver.
Its relatively easy to hide some gold coins in a sock drawer or cookie jar, but those same hiding places are impractical for the same investment in silver. Whether you buy coins or bars, youll need a lot more space to store silver than gold.
And because it requires more space, the fees for professional storage are higher with most depositories.
This difference applies to transporting physical silver as well: it may be more difficult, expensive, and cumbersome.
- Investor Implication: Gold takes up much less storage space than silver, is cheaper to store, is lighter and less cumbersome to transport, and doesnt tarnish.
Investing In Gold And Silver Stocks And Funds
When we talk about gold stocks, we dont mean stocks of companies that own large amounts of gold. Instead, theyre stocks in companies engaged in the business of mining gold.
Put another way, investing in gold stocks isnt the same as investing in gold bullion itself. Youre investing in the companies that produce it, which makes gold stocks more like other stocks than bullion.
But that doesnt mean gold stocks are irrelevant if you want to invest in gold. Since gold-mining stocks are tied to the metal itself, they tend to rise when the metal increases in value, and decline when the metal falls.
In fact, during a significant increase in the value of gold, gold-mining stocks can rise in price at a faster rate than the metal. This is because gold-mining stocks represent a form of leverage on the metal itself.
As the price of gold rises, profits for the mining companies increase as well. That increase in profits can be higher on a percentage basis than the increase in the gold price.
Pros And Cons Of Investing In Gold And Silver
Pros:
- Investing in gold and silver is a long-term strategy that can provide stability and peace of mind during times of economic uncertainty.
- There is a history of gold and silver being valuable assets, which means that there is a potential for capital growth over time.
- Price fluctuations are inherent to any investment, but gold and silver are more resistant to price swings than other investments, so they may provide some degree of protection against inflation.
- Gold and silver can be stored in physical form or traded electronically, which gives investors a variety of options for investing.
- Many people believe that the value of gold and silver will continue to increase, so investing in these assets could be a good way to create wealth over time.
Cons:
- Investing in gold and silver requires both time and financial resources, so it may not be suitable for everyone.
- The prices of gold and silver can be volatile, so an investment in these assets may not always be profitable.
- Gold and silver are not immune to economic disasters or geopolitical events, which could reduce their value significantly.
Bottom Line
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Is Silver A Better Investment Than Gold During A Recession
As mentioned above, gold will initially be pulled down with everything else during a recession. But it will be one of the first things to bounce back and increase in value throughout the recession.
Silver, on the other hand, doesnt have the same track record. Silver rarely increases in value during market selloffs. This might be due to silver having a higher industrial usage than gold. During a recession, industrial production slows down. As a result, the demand for silver decreases.
While silver does have a low correlation to stocks, it is thinly traded and volatile. Its certainly not a bad investment, but in the context of precious metals to invest in during a recession, silver loses out to gold.
Vaneck Vectors Gold Miners Etf
GDX is one of the most popular ETFs in the global mining sector. The fund owns all the major names in the mining space. Apart from gold, some of these firms also mine for metals like silver and copper.
Fund issuer: VanEck
2022 YTD performance: 2.2 percent
Five-year annual return: 8.26 percent
Assets under management: $13 billion
Expense ratio: 0.51 percent
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How To Buy Gold Stocks And Etfs
Convenience is one of the biggest appeals of trading gold stocks and ETFs. No gold to send in the mail, no safety deposit boxes, no messy futures contracts.
You can buy gold stocks and ETFs pretty much anywhere you can trade regular stocks and ETFs. If youre new to trading, check out our best online brokerage accounts for beginners.
Put Gold & Silver In Your Ira
Most investors don’t know that you can actually put gold and silver into your retirement account. This is possible by doing a rollover of a 401 or IRA to a self-directed IRA.
This type of IRA allows you to manage your own investments, while also investing in different asset classes besides stocks. Many retirees are taking advantage of these types of accounts because of their ability to diversity their retirement portfolios.
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So What’s The Verdict
So what’s my overall verdict on whether you should invest in Gold and Silver in 2022? The answer is yes, so check it out. Invest some money into precious metals in 2022 because it protects against inflation and economic uncertainty.
Here’s what you should do if you want to invest a small amount of money in silver. Silver has more upside potential because it is used in industrial applications.
However, if you want to invest a larger sum of money, invest in gold. Gold is scarcer than silver, so there is more potential for gain.
Remember, your goal should be to preserve your capital and investments so that you can save for retirement, college, etc.
I’m not telling people to liquidate their investments and put everything into precious metals either, especially if you’ve made solid gains or don’t have much capital to work with.
All I’m saying is that it makes sense for people to own at least 5% of their portfolio in gold and silver .
Gold Mining Companies & Stocks
Investing in gold mining companies is an interesting way to combine gold investments with traditional stocks. By purchasing shares in a company that works with gold, investors can access the profits of gold without buying or selling it themselves. This form of investing can also provide lower risks, as there are other business factors at play that can help protect investors from flat or declining gold prices. That being said, investors conduct significant research when searching for the right company to invest in. There are risks associated with the mining industry that can interfere with overall profits or even bring up ethical concerns. Always do your research when selecting a gold mining company to invest in.
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What Are The Drawbacks Of Investing In Gold
Holding gold, or having exposure to it via a pooled investment, is not risk-free. There can be several disadvantages for investors:
- There are no guarantees with gold. Its price, as with any asset class, is subject to fluctuations and can be volatile. An investor buying gold might have to wait some years before being able to sell for a profit.
- Gold does not produce an income or yield for investors, unlike savings accounts, bonds and dividend-paying shares.
- Physical gold can be difficult to trade for people with limited amounts to invest. Buying physical gold also requires verification of authenticity and safe storage.
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When Should You Buy Gold
Many investors see gold as a good hedge against rising prices and a store of value. It has also historically been a strong hedge during times of financial crisis. The best times to buy gold are when concerns about inflation or economic crisis are beginning to surface since gold tends to rise during those periods.
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Are Gold And Silver Good Investments
The short answer to whether learning how to invest in gold and silver is a good idea is yes. Many investing experts see gold and silver investment as an essential part of a portfolio designed for long-term profits.
If you want to invest in gold coins or add silver to your investment portfolio, understand that this move is usually a hedge against losses in a volatile stock market or troubled economy.
Invest in gold and silver conservatively, committing no more than 5 to 10 percent of your portfolio to precious metals.
Just as timing the stock market is a risky idea, so is trading gold and silver for profits. Most experts recommend holding precious metals for longer-term investing.
Over time, gold has proven to be a hedge against inflation and loss during troubled times including recessions.
The 1943 Lincoln Head Copper Penny
Heres another coin that you just might find tucked inside a dresser sometime, and its the conditions surrounding its production that make the 1943 Lincoln Head Copper Penny interesting and valuable.
While pennies were normally made of copper and nickel, the U.S. needed the metals for war efforts, so the mint started using steel to produce the coin. But it mistakenly still struck a batch of pennies with copper, potentially because blanks remained in the press when the mint began making new steel pennies. Experts estimate that about 40 of these pennies exist, though some say fewer than 20 examples remain.
The U.S. Mint says these coins are frequently counterfeited because of the relative ease of coating steel pennies with copper and altering the date on coins struck in 1945, 1948 and 1949. But to see if the coin is actually steel, you can see if it sticks to a magnet.
While a regular steel 1943 Lincoln penny might fetch you 30 or 40 cents again about 30 or 40 times more than its face value the special copper versions fetched $204,000 at a 2019 auction. This specimen of the coin had been held by a man for some 70 years since boyhood after he found it at his school cafeteria.
The record sales price for a version of this coin is $1.75 million in a 2010 auction, according to Coin Week.
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Buy Gold And Silver Etfs
Exchange-traded funds, or ETFs, are a popular investment option for those looking to invest in a diversified group of stocks, but many dont even think about them when investing in assets like silver and gold. The firms that manage these funds pool money from large groups of investors and buy large amounts of the assets they target, often giving them an edge in the market.
Although most ETFs are focused on assets like stocks and bonds, there are plenty of funds that make investments in precious metals. By investing in these funds, youll gain exposure to these safe-haven assets without having to handle the buying, selling, or storage of physical bullion.
However, there are cons to consider here. Investment-grade funds are managed by experts, which comes at a cost in the form of the funds expense ratio. Moreover, when investing in ETFs, you wont have any physical metals in your possession, which is a factor many precious metal investors enjoy.
Many precious metal ETFs trade on major stock exchanges like the Nasdaq and New York Stock Exchange. Some of the most popular precious metals ETFs include SPDR Gold Trust , iShares Gold Trust , and iShares Silver Trust .
Buying Gold Futures Options
More experienced investors who dont want to risk a lot of capital might consider options on gold futures or options on a gold ETF. These contracts represent the rightbut not the obligationto buy or sell an asset at a specific price for a certain amount of time. Options can be used whether you think the price of gold is going up or going down. If you guess wrong, the maximum risk associated with buying options is the premium you paid to enter the contract.
Available in the U.S. through the Chicago Mercantile Exchange, put and call options on gold futures can be bought and sold through a futures broker. Options on SPDR Gold Shares ETF are also available to investors and can be traded in a standard brokerage account that has received approval for options trading. Meanwhile, some traders buy and sell gold futures contractswhich trade on CME under the symbol GCto speculate on short-term moves higher or lower in the yellow metal.
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Filling Up Your Treasure Chest
Let’s take a look at the options available to those who want to invest in precious metals.
- Commodity Exchange-Traded Funds :Exchange-traded funds are a convenient and liquid means of purchasing and selling gold, silver, palladium, or platinum. Investing in ETFs, though, doesn’t give you access to the physical commodity, so you don’t have a claim on the metal in the fund. You will not get the actual delivery of a gold bar or silver coin.
- Common Stocks and Mutual Funds: Shares of precious metals miners are leveraged to price movements in the precious metals. Unless you’re aware of how mining stocks are valued, it may be wiser to stick to funds with managers with solid performance records.
- Futures and Options: The futures and options markets offer liquidity and leverage to investors who want to make big bets on metals. The greatest potential profits and losses can be had with derivative products.
- Bullion: Coins and bars are strictly for those who have a place to put them like a safe deposit box or safe. Certainly, for those who are expecting the worst, bullion is the only option, but for investors with a time horizon, bullion is illiquid and downright bothersome to hold.
- Certificates: Certificates offer investors all the benefits of physical gold ownership without the hassle of transportation and storage. That said, if you’re looking for insurance in a real disaster, certificates are just paper. Don’t expect anyone to take them in exchange for anything of value.
Gold Exchange Traded Funds
Gold ETFs are a more direct play on gold bullion itself. You can invest in gold ETFs, such as SPDR Gold Shares and iShares Gold Trust , which actually own gold bullion itself, and not mining shares.
Like mutual funds, they can be purchased through investment brokers or directly through the sponsoring fund family. Gold ETFs are a very convenient way to own the metal itself.
Though technically speaking, you wont have direct ownership of the metal, but rather shares in the fund that owns the metal.
But through the ETF youll be able to hold a position in the metal in a way similar to the way you buy, hold, and sell stocks, bonds, and other paper assets.
That will make it much easier for you to buy into the metal, increase or decrease your position, or sell completely. You also have to concern yourself with taking physical possession of the metal.
This can become problematic for investors, who may not be thrilled with the process of taking delivery of the metal, storing it, and then when the time comes, selling it.
Holding bullion through an ETF eliminates those complications. However, if you prefer taking direct possession of the metals, perhaps out of concern that the financial system will undergo a complete collapse and disrupt the integrity of paper investments, you may be better off owning bullion outright.
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How Much Are Gold Bars
The cost of gold bars varies based on the market value of gold, which fluctuates daily. It can also vary depending on the seller and the type of gold you purchase. As of October 21, 2022, the live spot price of gold is $1,638.42 per ounce. If you were to buy a 1-ounce bar of gold, you would likely spend around $1,638.
Very Long History As Both A Store Of Value And A Medium Of Exchange
Gold and silver serve as both because they have represented money for thousands of years. While they havent carried the same status in recent decades, the much longer historical trend is extremely well-established.
While gold – especially gold jewelry – has traditionally been the metal of choice among the wealthy, silver has been the preferred hold among the masses.
This is due primarily to silvers much lower price. But both have been held as a monetary asset because of their rarity.
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When Is A Good Time To Invest In Silver
Investors can consider investing in silver in a variety of scenarios:
- Supply and demand are out of touch: If the supply of silver is not keeping up with demand, it may cause the price of silver to rise.
- An attractively priced company becomes available: If you find a company thats ramping up production or is able to take advantage of rising silver prices, it could be a good time to buy.
- You need a hedge against inflation: Some investors turn to commodities such as silver as a way to hedge against inflation
- You want to hedge your portfolio: If you have significant exposure to rising silver prices in your portfolio , you could buy silver and help offset that exposure.
- You want to add commodities to your portfolio: Silver can be part of an allocation to commodities in your portfolio, helping to diversify your holdings and lower your risk.
While adding silver to your portfolio can be a useful strategy for more advanced investors, beginners may be better-served by building a well-rounded portfolio made up of the best investments.
