Thanks to inflation, high interest rates and overall economic uncertainty, many Americans have looked toward precious metals in recent years. These investments often provide a low-risk way to both protect wealth and, in many cases, even grow it. Interest in precious metals has grown so much that even big-box stores like Costco have begun selling gold and silver bars and coins.
But while both of these can be good options for investors, in some cases, one may be a better choice than the other.
“Some individuals purchase silver as if it were a perfect substitute for gold simply because both are precious metals and the price of the former is usually a fraction of the latter,” says Peter C. Earle, a senior economist with the American Institute for Economic Research. “But there are differences in demand, liquidity, and performance under various market and economic conditions which make them similar — but quite imperfect — as substitutes.”
Not sure if you should put your money in gold or silver bars and coins? Below, we’ll break down what experts have to say.
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Gold bars and coins vs. silver bars and coins: Which is better for investors?
Here’s how to tell when each precious metal type may be preferable, according to the experts we spoke to.
When gold bars and coins are better for investors
If you’re mostly worried about inflation and the declining value of your dollar, gold bars and coins are going to be the better option over silver, some experts say.
“Generally speaking, gold will be a more suitable inflation hedge,” says Matt Willer, managing director of capital markets at Phoenix Capital Group Holdings.
This is because gold is more scarce, yet retains high demand — both from investors and various governments across the world. Silver — which is much more available and used in many industrial ways — sees more ebbs and flows in demand and pricing. This also makes gold a lower-risk investment, so if you’re more conservative with your money, you may want to choose gold rather than silver, according to experts.
“Prices for silver can be volatile,” Earle says. “And in a severe depression, while gold is likely to rise in price, it’s conceivable that the price of silver may actually fall as demand for the products and processes utilizing it decline.”
Finally, if you’re short of storage space (or don’t want to pay for a lot of it), gold can also be the better option.
“With burglaries and theft on the rise, your valuables need to be vaulted,” says Nick Fulton, managing partner at USA Pawn and chairman of the Mississippi Pawnbrokers Association. “It’s much easier to move $50,000 in gold to a safety deposit box versus silver. To put the weight amount into perspective, in today’s market, it takes 85.55 ounces of silver to equal 1 ounce of gold.”
Learn more about the benefits of investing in gold here today.
When silver bars and coins are better for investors
Gold can be a smart choice for many investors, but for some, silver may be the better fit — particularly if you’re on a tight budget. This is because silver comes at a much lower price than gold, allowing you to purchase more of it for the same amount.
It also offers you a chance at higher returns, and it can be especially profitable in good economic times, Earle says.
“During periods of strong economic expansion, when inflation is low and employment expanding at a noninflationary rate, silver may rise simply owing to expanded industrial use,” Earle says. Meanwhile, he says, growth in gold is more likely to be “muted,” particularly if inflation and geopolitical tensions are low.
Finally, you might want to invest in silver if you’re expecting a surge in demand for products that require silver in their manufacturing.
“Gold is primarily used for jewelry only, while silver is a significant component in green energy, like solar panels and also medical devices,” says Nicholas Ganesh, managing member of Endeavor Metals Group. “So if you are making a bet on a more macro theme, silver may be a better option.”
Deciding between gold and silver
Both gold and silver have their uses, but if you’re not sure which is best to invest in right now, there are a few things you should consider, experts say. First, know your purpose for the investment. If it’s to produce high returns, opt for silver. If you’re looking more for a safe way to protect your wealth and beat inflation, consider gold.
You can also look at market conditions, including gold and silver prices, for guidance. “Factors such as supply and demand dynamics, geopolitical events, and economic indicators can influence the prices of different forms of precious metals,” says Alex Ebkarian, co-founder of Allegiance Gold.
And if you still can’t decide, opt for buying both, as long you have the budget for it. “Consider diversifying your wealth into gold and silver, versus choosing one over the other,” Ebkarian says.
