Silver vs. Gold
Any potential silver investor should appreciate the fact that silver compares very favourably to gold, especially when one considers the following:
- Silver has more uses than gold: Without going into much of the detail, silver has more uses than gold, especially when it comes to industrial applications. It therefore shouldn’t come as a surprise that there’s an extremely high demand for silver by industry. In fact, for a long time industry has been consuming silver at a much faster rate than it can be produced. Gold on the other hand has limited demand when it comes to industrial applications, other than for use in jewelry. In other words, silver is more valuable to industry than gold, although this is not reflecting in the silver price yet. This the very reason why investors should not be shy to invest in silver while it can be done at much lower price levels relative to the gold price and the true value of silver.
- Silver is cheaper than gold: Silver has been trading at price levels much lower than that of gold, mainly fuelled by a worldwide misperception that there’s many times more silver than gold available. The truth is that, firstly, there’s more or less five times more gold than silver available in documented above-ground supplies, and secondly, there are less years of silver production remaining underground to be mined than can be said of gold. In other words, given the facts mentioned above, the potential silver investor is presented by probably the best opportunity in the world to increase his/her net worth substantially by investing in silver now while it’s still affordable to do so.
- Silver is more volatile than gold: The silver price has traditionally been more volatile than the gold price. This is mainly due to the fact that gold largely remains the precious metal of choice, although this is something Silver Bullion and other parties are set to correct, since there’s less silver available than gold and silver has many more uses than gold. For example: Some time ago the gold price increased from $1250 per fine ounce to $1280 per fine ounce over a very short space of time. This equated to a 2.4% increase in the gold price (or price of gold). During more or less the same time the silver price increased from $18 per fine ounce to $20 per fine ounce of silver. This however equated to an 11.11% increase in the silver price (or price of silver). In other words, silver is more volatile than gold, which means you can expect to make or lose money faster than with gold. It must however be said that with silver at a very low price relative to gold, the down side risk is very small. In addition, one shouldn’t forget that there’s less silver available than gold and silver has many more uses than gold.
- Silver better for average purchases during times of crisis: Gold currently offers more physical concentration of wealth than silver. This is due to the huge price difference that currently exists between the two precious metals. However, silver has proven that it can shine during times of crisis. Silver’s value is not as concentrated, making it a much better currency for average purchases (food, clothing, etc.) than gold during a time of crisis such as a financial system collapse. You don’t want to go to the food market with gold when it’s highly unlikely that you will get any change for your gold!
Gold currently best for concentration of wealth…
Let’s explain: Assume you have R10 000 to invest in gold or silver. For argument’s sake the gold price stands at $1250 (R10 000) per fine ounce while silver is trading at $20 (R160) per fine ounce. Now let’s assume you’re lucky and have the option to buy an ounce Krugerrand for R10 000. If you do, you will sit with one coin worth R10 000 which will be fairly easy to transport, to store or stash away. On the other hand, if you choose to invest in American Silver Eagles (among the largest silver bullion coins in the world), you will have to buy over 60 coins to concentrate R10 000’s worth of wealth.
Silver best to use for average purchases during times of crisis…
let’s explain: Imagine for a second that the current financial system backed by fiat money or non-redeemable paper notes collapses. You go down to your local market place to buy groceries. Needless to say, they refuse to accept any notes or coins previously used. No problem you think, I’ve got three one ounce gold coins in my pocket and more stashed away at home. “How much will it be for a loaf of bread, two strips of that meat, a bag of potatoes, five cups of rice, three tomatoes, two onions, a box of matches, three candles and some salt?,” you ask the trader. “It will be one ounce of silver,” he answers. “I don’t have silver on me. Would you mind to accept one ounce of gold instead, and give me silver and perhaps gold in return?” you ask. “Yes actually, it presents a bit of a problem to me. I won’t be able to give you much change in return, since I simply don’t have enough silver or gold to give in return. I am sure there are plenty of traders that will take your gold off you to pay for groceries, but 9 times out of 10 you can expect to lose a lot of money in the process. Except if you want to add the car that’s parked under that tree to your purchases perhaps?” the trader replies.Our recommendation: Make sure that you have enough silver coins, especially one ounce silver bullion coins, stashed away to use in an emergency. American Silver Eagles make a great choice. You don’t want to overdo it, but you want to try and stash away at least 100 ounces of silver. In other words, it currently makes sense to buy more gold than silver if you have a problem with storage space. Silver will however be of a great value when the current financial system collapses, especially when it comes to average purchases. It’s therefore best to buy or to own gold and silver, especially gold and silver bullion coins.
- Silver offers less durability of beauty: Silver, especially in the form of silver bullion coins and bars, can stain or tarnish very easily. Silver tarnishes when exposed to water or air containing hydrogen sulfide or ozone. The same is not true for gold. Gold is not easily tarnished and keeps its luster even when touched or handled with bare hands. In other words, gold offers more durability of beauty since it doesn’t tarnish or stain easily.