Right now silver and gold are very appealing to investors who love being in a bear market. However, these two metals are not equal. When the economy is in trouble, a lot of investors rush to gold. Gold is regarded as a safe haven but so is silver. These two metals have been the most sought-after precious metals in the world. And they have been a symbol of wealth for a long time. They are very appealing when currencies seem to be losing their value.
The pandemic and the resulting drop in the value of the U.S dollar sent the price of gold high. For the first time on recent history gold hit the $2,000 an ounce mark. Silver also had its rally. It reached a seventh year high of $28 an ounce. That was a 140% jump from lowest low in 2020.
Many investors will invest in gold and also put a small percentage of their assets in silver. This is done to keep their investment portfolios as diverse as possible.
These two precious metals have the same high and low cycles but there are a couple of differences to consider when deciding whether to buy silver bullion Brisbane or gold bullion.
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#1. Gold is more expensive because there is only a finite amount of gold available in the world. To add to that, gold mining is not only expensive but dangerous. The gold mining industry has to spend billions keeping mines open and operational.
To illustrate how rare gold is consider that in 2019, only 3,300 tons of the yellow metal were mined compared to over 27,000 tons of silver.
#2. The high use of silver in industry makes gold a better choice as a hedge.
Both metals tend to move in the same direction but the demand for gold and the price outpaces that of silver in a recession.
The demand for silver is driven by its industrial uses and it’s wide use in electronics. Silver is also used in solar panels and automobile industries and when these industries grow, the demand for silver also grows. However when the weakening of the economy affects these industries, it affects the demand for gold an the price can fall. When production rises, the silver price goes up but when it falls, so does the price of silver.
The price of gold usually goes up when stocks fall. For instance, in December 2007, when the so called great recession began, the S&P 500 fell by 37% between December 2007 and May 2009 and the price of gold went up by 24%.
#3. Silver is very volatile
The fluctuations of gold prices over the short-term get plenty of attention but gold is very stable in the long-term.
Because the silver market is so small in relation to gold, it makes it more susceptible to extremely wild price swings. The volatility of silver is also affected by the act that over 70% of the silver supply is produced as a byproduct of other mining operations like copper mining. This makes it less responsive to the demand.
Silver will be more appealing to someone who is looking to speculate on short-term variations. It isn’t as appealing as a long-term hedge.
There in lies the answer of whether you should buy silver bullion Brisbane or gold bullion. Savvy Investors buy just about enough silver for the short term because it is more liquid and they will keep their gold for as long as possible.