Silver is more volatile, cheaper and more closely linked to the industrial economy. Gold is more expensive and is a better way to diversify your overall portfolio. One or both could have a place in your portfolio. Perhaps the best use of gold as an investment is to mitigate portfolio risk.
While many investors are looking for gold and silver in physical form, such as gold bars or coins, it is often better to invest in mining stocks. At current prices, the same dollar investment gives you around 80 ounces of silver more than gold. Gold and silver prices are so unstable (and have been over time) that in an economic crisis, they would only be useful to hope that someone will take your silver coins or watch and exchange a pack of toilet paper or a can of gas in return. The dollar could not be converted into gold since President Richard Nixon ended the practice in 1971. [1] Before that, people bought gold bars to diversify their investment portfolio and protect themselves from inflation.
It’s not often that you can bring a bag of gold chains to the gas station and exchange it for a full tank of gas. So if you buy as an investor during a bull market, history says that silver will give you a higher return than gold. Let’s take a look at the gold-silver ratio, which tells you how many ounces of silver you need to buy a single ounce of gold. Unless you want to get into jewelry making, investing your hard-earned money in precious metals like gold, silver, and platinum isn’t the best use of your money.
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varying degrees, both gold and silver can provide protection against a possible economic or market downturn and during sustained periods of rising inflation. While gold and silver have similar boom-and-bust cycles, there are a few key differences to consider when deciding whether or not to invest in gold. On the one hand, investors often pay a premium over the metal spot price for gold and silver coins due to manufacturing and distribution premiums. And as Dave says: “Since the Roman Empire, gold has never been used as a medium of exchange for a collapsed economy.
Investors are not only driving up the price of gold in a bear market, but the yellow metal is also relatively isolated from a slowdown in economic activity because industrial uses are so limited. Talk to your Morgan Stanley financial advisor to find out how adding gold or silver to your portfolio can help you achieve your long-term financial goals. Jeff speaks regularly at precious metals conferences, is a board member of Strategic Wealth Preservation in Grand Cayman, and provides GoldSilver clients with exclusive analysis and market commentary.
