4 times to choose a gold investment over silver

For long-term investors, a well diversified portfolio could be the key to success.

There are plenty of options for diversification to choose from today — from index funds and real estate to alternative assets. But valuable commodities, including silver and gold, can play an important role in a balanced portfolio, too.

While gold has a higher value per ounce and potentially more growth over time, silver is available at a more accessible price point and has industrial uses in our economy today. If you’re thinking about adding these precious metals to your portfolio, it’s smart to understand when to choose one over the other.

Learn more about your gold investing options today with a free information kit.

4 times to choose a gold investment over silver

Here are four times when it could be a good choice to invest in gold instead of silver:

For better long-term returns

Gold is a great option for long-term investors, thanks to its proven growth over time.

“Gold has been a part of a well-diversified portfolio for centuries,” says Mel Mattison, CFP, financial services professional and consultant. Along with being a safe haven during periods of economic distress and political turmoil, he says, “gold also has amazing staying power to produce constant appreciation over the medium and long term, rising more than 5,000% since Nixon essentially ended U.S. management of a global gold-exchange standard in the early 70s.”

Silver’s value has grown over time too — just not as much as gold. Using historical spot price data, for example, gold’s value has increased by more than 500% since 2000 while silver has increased by around 360% in the same period. 

Still, it’s important to remember to use gold as a diversifier in your portfolio. Despite prices rising over time, gold does not result in the same returns as you’ll get from more traditional stock and bond investments. That’s why experts recommend sticking to a gold investment of around 5% to 10%. You can find out more about adding gold to your portfolio today with a free investors kit.

For less volatility

Another characteristic of silver is its tendency to move with greater price swings. Gold, while it can be volatile, tends to maintain a more steady value, even over shorter time periods.

Take the first six months of this year for example. Silver has moved from around $24 per ounce to $23 — not a big jump. However, in that time, the price has fallen as low as $20 and as high as $26 — a 30% difference. Meanwhile, gold has only moved from around $1,920 to $1,950, with lows near $1,830 and highs of about $2,040 — closer to an 11% difference.

If you’re someone who is easily influenced by big price jumps, or you’re simply looking to add precious metals for consistent stability, you may prefer gold.

When you have more money to invest

A big benefit of investing in silver is its affordability. You can buy several ounces of silver for the cost of a single ounce of gold.

“For those investors that find gold to be too pricey, then silver bullion coins are very attractive,” says Paul Mladjenovic, author of Stock Investing For Dummies.  

However, if you have a relatively robust portfolio and can spend the money without surpassing the 5% to 10% threshold, you may have no issue going for the yellow metal.

When you want to hedge economic downturn

Gold may be the better option for investors specifically looking to hedge against a looming recession. 

In general, “Silver has an advantage in that today’s technology uses huge amounts of silver and that demand is bullish for silver’s long-term price,” Mladjenovic says. 

However, some believe that could be a potential detriment during periods of economic downturn. Silver is used in a number of industries — from electronics to manufacturing processes — which can make its price more susceptible to the broader economy. Gold, on the other hand, tends to have an inverse relationship with other markets during downturns. If the stock market is down, gold’s price tends to rise.

While every market fluctuates over time, gold has a unique ability to preserve value during periods of economic downturn, which could make it more appealing for some investors. Find out more about investing in gold today with a free investment guide. 

The bottom line

Both silver and gold can make worthwhile additions to your portfolio. But depending on your goals and individual investment plan, gold may have some advantages over silver. Long-term growth and stability, as well as overall value and being a hedge against a recession could all be reasons to prioritize gold. 

If you’re not sure exactly how commodities may fit in your overall portfolio, consider speaking with an expert who can help you assess your path forward. Start with a free information kit to learn more about your options today.

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