Gold vs silver: Five key factors to help you decide

You’ve studied investment books, soaked up expert podcasts and know diversification is key – but now you’re faced with an age-old conundrum: gold or silver?

While both shine as trusted stores of wealth, choosing between them depends on a few crucial factors. Let’s break them down so you can confidently add precious metals to your portfolio.

What to know when choosing gold or silver 

1. Cost

Gold’s higher price tag reflects its rarity and status as a safe haven asset, holding strong when other investments fluctuate.

On the other hand, silver is mined at much higher volumes – around eight times more than gold – and comes with a lower cost per ounce. This makes silver an accessible choice for new investors or those with smaller budgets.

2. Volatility

For those keen on short-term market opportunities, silver’s price movements are more volatile than gold’s, making it a potential option for speculative strategies. Savvy investors often use the gold-to-silver ratio to switch between metals for portfolio growth over time.

This ratio, calculated by dividing the gold price by the silver price, guides investment decisions by comparing the relative value of the two metals.

3. Liquidity

Both gold and silver are highly liquid assets, meaning there’s always a robust market of buyers and sellers. This liquidity offers flexibility and is particularly beneficial for investors looking to diversify their portfolios while maintaining easy access to their wealth.

4. Industrial use

Over 50% of silver’s demand comes from industrial applications, compared to less than 5% for gold. This means silver’s price is more affected by whether the global economy is growing. Gold, however, is less affected during economic downturns, proving its resilience as an investment.

5. Bull or bear markets

In bullish markets with rising stock values, silver often thrives due to increased industrial demand. In bearish markets, however, gold’s stability shines, making it a preferred choice during economic uncertainty – like the Global Financial Crisis.

Choosing your investment type

 Whether you opt for bullion bars, coins or exchange traded products (ETPs), The Perth Mint offers trusted solutions backed by the Government of Western Australia. From gold’s timeless appeal to silver’s industrial versatility, both metals have a place in a well-rounded portfolio.

Gold may offer steadier long-term returns, while silver’s affordability and industrial ties create unique opportunities. Whatever your investment goals, precious metals are a wise choice for diversification and lasting value.

Ready to take the plunge? Start your journey today by opening a depository online account with The Perth Mint.  

First published 2 August 2022