Gold vs Silver: Is Silver Worth Investing in instead of Gold

Precious metals as investments are popular – especially during times of economic uncertainty. Both gold and silver are considered to be “safe haven” investments – investments that retain and even enhance their value during periods of economic downturn or turbulence. In this article, we’ll give you an overview of the value of investing in one or the other, highlighting important differences and how these types of precious metal investments can complement a variety of portfolios and objectives.

Deciding on gold vs silver when making a precious metals investment can be tricky and is ultimately a personal decision (and one we suggest you make in conjunction with a licensed financial advisor). At Gold Stackers, we want to provide as much guidance as we can to ensure you’re making a decision that works for you and your portfolio long term. We provide top-quality precious metal products in the form of bullion, bars, and coins and we’re always happy to give product guidance where needed. 

TL;DR

• Gold and silver have thousands of years of cultural value – and this is likely to bolster their value into the future.
• While gold’s market size, historical value, and stability is superior to silver’s, silver has an exciting future with new industrial applications on the horizon and a lower price point.
• While both gold and silver are ‘safe-haven’, stable assets that help secure investment portfolios during turbulent financial times, the choice to invest in gold or silver (or both) should come from careful consideration of risk appetite and investment goals.

Historical Context 

Both modern economies and ancient civilisations have relied upon gold and silver as precious commodities. Gold and silver have been treasured for thousands of years: some sources date the first smelting of gold back to 3600 BCE in Ancient Egypt. Records of silver mining come later – approximately 3000 BCE in Anatolia (a region that now falls within the nation of Türkiye), with evidence of a gold-silver alloy coin being used as currency from around 600 BCE.

While neither gold nor silver forms a significant part of global physical currency in these modern times, their physical asset status still provides a form of security and stability that can be observed over decades and centuries. 

Market Fundamentals

The fundamental factors influencing gold and silver markets are market size and liquidity, as well as industrial demand and the influence of central banks – factors that have varying impacts on each commodity. The market size for gold tends to be larger with more liquidity, while silver’s is more volatile due to the added factors of industrial utilisation.

In the value game of gold vs silver, silver’s historical value is lower – sometimes at ratios of nearly 100 to 1. However, its renaissance as a key material is vital to understanding its future. While gold remains a favourite for jewellery and as a financial asset, silver’s future looks bright thanks to its utility in growing burgeoning industries. Silver is an exceptional conductor, making it a powerful component in batteries and solar panels. It’s also extremely useful in medical applications, thanks to its purported antimicrobial properties – properties that have been explored for centuries.  

Central bank stockpiles of gold have a long history, with gold stockpiles far outstripping silver in this aspect, and making it more relevant to gold. Central bank behaviour surrounding these materials can impact their value – central banks increasing their stockpiles of gold signals a stronger demand for gold, which in turn drives up its price. And of course, the reverse – selling off gold – can result in a decline in gold prices. 

Price Volatility

When it comes to price volatility in gold vs silver, silver is clearly considered the more volatile option. Silver’s volatility, however, isn’t necessarily a flat risk for investors. Like most precious metals, silver is still considered a safe harbour against turbulent economic conditions. But when compared to gold, it has additional factors that influence its price – and consequently, additional factors that investors need to consider when cultivating their portfolios. Silver is more than just a precious metal – it’s an industrial ingredient across a number of industries. As economic downturns hit, industry can slow, which can, in turn, impact silver prices. Traders, working with their financial advisor, can overcome this challenge by paying close attention to manufacturing trends and trade tariffs that might come into place. While staying abreast of market forces is important, both silver and gold have historically performed well amidst global financial turmoil, including impressive past performance during the Great Financial Crisis and the COVID-19 pandemic. So, while nuances in volatility can help you maximise your investment, you should find relative stability in these assets.

Investment Purposes 

Both silver and gold perform as safe-haven assets, as they are both – of course – scarce, precious metals. However, silver has another string to its bow, representing the traditional stability of precious metals and the burgeoning industrial importance of renewable energy technologies. 

As the energy grid transitions to include renewable technologies that rely on batteries and solar panels, silver stands to benefit as a helpful component in the construction of both of those technologies. You’ll also find silver components in your everyday personal electronics, such as your smartphone – it’s an exceptional conductor and extremely useful in that context. This doesn’t necessarily mean that silver has a chance of outperforming gold in terms of price, but rather that its growth has more than one factor promoting its trajectory. Choosing one over the other depends on your investment priorities and strategies – gold traditionally will remain a hedge over multiple decades and silver might be thought of in the shorter term as its industrial demand gains further traction. 

Storage and Costs 

While both have considerations when it comes to storage, it’s generally accepted that gold is easier to store than silver based on space alone as it is denser. Accessibility of assets can be an important part of why investors choose gold and silver. For this reason, some investors with at-home capabilities choose to store their own gold or silver within their homes, rather than rely on external partners. However, this does come with added security challenges and instability, along with hiking insurance premiums on your home, and appraisal also being a costly factor in this process. Gold Stackers allow you to bring your existing items to us for storage, with its state-of-the-art security and protection giving you absolute peace of mind – it’s an easy-to-manage option for those looking for storage of their precious metals.

Accessibility and Affordability

Silver can be seen as a more accessible commodity due to its significantly lower cost – this makes it popular for those just beginning their precious metals journey. However, silver is not the only solution for those looking for a lower-cost alternative. Fractional gold – gold products featuring less than one troy ounce of gold – also offer an inviting alternative if silver doesn’t meet an investor’s existing requirements. For beginning investors, either choice is worth discussing as both have historically performed wellduring times of economic instability and provide a lower cost option. 

Tax Considerations

Like any other capital asset, gold and silver are subject to Capital Gains Tax (CGT), in Australia. However, if you’ve held the asset for longer than a year, you may be eligible for a discounted rate. As gold and silver are generally assets held for longer periods of time, this can work in a precious metal investor’s favour. It’s always important to consult thoroughly with a tax advisor or financial advisor when making any decisions in this area – your individual circumstances should be brought into consideration by a trained and licensed professional before making any sales.

While gold and silver both offer exciting possibilities for investors, it ultimately comes down to your personal goals as to which material you pick or what material mix you select. Gold’s stability and higher value might appeal to investors, while silver’s interesting industrial future and lower price point might appeal to others. Ultimately, it comes down to personal risk appetite and individual goals and timelines. At Gold Stackers, we’re enthusiastic about providing expert product guidance. We’ve got an extensive product range and we’re here to help you understand how it could help you achieve your investment goals, regardless of what they might be. If this has piqued your interest, there’s still plenty to learn and explore – a consultation with Gold Stackers could be a fantastic next step. Get in touch with us to start your precious metals investment journey.