Buying gold and silver is something about which an endless amount of writing has been done in recent years. While precious metals investment can be, to some extent, lumped together between the various metals, as they do have many qualities in common between them, there are also some significant differences, even between buying gold and silver. Gold and silver are typically linked, principally because they both have an incredibly long history of being used as stores of wealth and as currencies in various societies. There are some differences, however, between buying gold and silver that investors should be aware of.
Silver is always priced at a fraction of the price of gold, but it has never been worth nothing at all. Silver is interesting as far as precious metals are concerned. If you pay attention to the precious metals market, you’ll realize that the next most expensive metal on the market, palladium, generally trades for quite a bit more than silver. Palladium is generally worth hundreds of dollars per troy ounce while silver is typically, even in a good market, worth around $20 per ounce.
This is actually an advantage that silver has. Silver is a precious metal, which means it has the same highly desirable qualities as other precious metals. It resists aging, functions very well as an electrical conductor, is easy to work with and is excellent for making coinage and jewelry, just like gold. Silver’s abundant enough, however, that it is also entirely practical as an industrial material. The price of silver is low enough that it can be used in its pure form and in alloyed forms to manufacture everything from the most sophisticated of medical devices to the simplest household items, such as forks.
This differentiates silver from gold significantly. Nobody would think of wasting gold on a fork.
Gold, is typically viewed as the most prestigious of all precious metals. It has an ancient history, is recognized around the world as an efficient and reliable way to transfer wealth and to store wealth and has an excellent reputation as a hedge against inflation. Gold is also extremely expensive. It is far more expensive than silver or palladium, though it usually trades for less than platinum.
Gold is not a particularly desirable industrial material, simply because of the price. Gold, however, has a value that spans cultures. India, China and other nations all purchase gold as a store of wealth. Their central banks all hold huge amounts of gold. This is an interesting feature of this metal. Though cultures, political systems and economic systems may be exceptionally divergent between one and the next, they all recognize gold is something very valuable.
Buying silver and gold, even though they are oftentimes activities engaged in by the same investors, are oftentimes done for different reasons and, even between these two metals, it’s possible to diversify a portfolio quite a bit.
Buying gold and silver is particularly popular among investors who worry greatly about the stability of the economy. The great thing about these investments, however, is neither of them is restricted to performing well in a poor economy. Gold still functions as an excellent store of wealth when the economy is doing well and silver can turn a profit in a good economy or a bad economy, due to the fact that it serves as an industrial material and a hedge against inflation. This is among the reasons that people are so very much interested in buying gold and silver, even though the prices for both of these metals have declined recently.