Both gold and silver are attached to the sentimental value of Indians and are considered precious in Indian culture. In addition to this, investors are constantly attached to both these hard assets as they provide a hedge against inflation and economic downturn.
Rising inflation, holding of interest rates by the US Federal Bank, and the banking crisis in the US have caused silver and gold prices to go up globally. These developments indicate a rising demand for hard assets as investors are uncertain of the current economic scenario.
Since these metals are generally of high value, they are considered a better investment option than trading in currencies. However, if you have already decided to invest in hard assets, the question arises of which one is better: gold vs silver investment.
Read on to know about the aspects related to investment in silver vs gold, including how to own it, returns, and which one is the better investment avenue.
You must look at the long-term returns that these assets have provided. From 1925 to 2020, the price of gold compounded by 4.87% annually.
In the same 95-year period, the price of silver grew by a compound rate of 3.46% annually.
If you are wondering, “Is gold or silver a better investment to safeguard savings from the effects of inflation?”, it helps to know that both work fairly well.
Both silver and gold are considered as a hedge against inflationary forces. There is a strong relationship between inflation rates and gold. When the inflation rate hikes, the gold prices also follow suit, and vice versa.
While the relationship between silver rates and inflation is also high, their movement is not as dependent as is the case with gold’s price.
People use gold as a store of value, as only 10% of the globe’s gold supplies are directed towards industrial applications. Hence, the value of gold majorly depends on the needs of investors.
On the other hand, silver performs better during periods of economic downturn because 65% of silver’s demand is generated through industrial use. As such, it would be fair to say that silver’s demand, at least from an industrial standpoint, is fairly consistent.
In the long run, silver prices, while market-dependent, are generally stable. However, in shorter terms, silver prices can be highly volatile, which makes gold a better investment option for short-positioning.
In conclusion, the answer to the question, “Is it better to buy gold or silver?” depends on a number of factors. Analyse gold versus silver on different criteria to determine which investment option is the best one as per your needs.
FAQS on Silver VS Gold
What is stronger, silver or gold?
If you are wondering, “Is silver stronger than gold”, then the answer is yes. When measuring how much it is dented by a diamond on a Vickers scale, silver is harder than gold. On the other hand, if you measure how easily the surface of the metal is scratched on a Mohs scale, silver performs better than gold.
Is silver more volatile than gold?
Yes, in the short term, the price of silver can be highly volatile in comparison to gold.
Are there any risks associated with owning silver or gold?
Yes, silver’s volatile nature makes it a riskier investment as compared to gold.
Should I consider diversifying my portfolio with both silver and gold?
Yes, you can diversify your portfolio by owning both silver and gold, which helps in minimising the risk involved.
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