Silver is more volatile, cheaper and more closely linked to the industrial economy. Gold is more expensive and is a better way to diversify your overall portfolio. One or both could have a place in your portfolio. Perhaps the best use of gold as an investment is to mitigate portfolio risk.
You avoid the headaches that come with storing and selling physical gold and silver, and you can earn dividends. I don’t mean to sound like a broken record here, but just like gold and silver, platinum isn’t the investment you’re looking for. Jeff speaks regularly at precious metals conferences, is a board member of Strategic Wealth Preservation in Grand Cayman, and provides GoldSilver clients with exclusive analysis and market commentary. It’s relatively easy to hide a few gold coins in a sock drawer or cookie jar, but the same hiding places are impractical for the same investment in silver.
For one thing, investors often pay a premium over the spot price of metal for gold and silver coins due to manufacturing and distribution premiums. Just like holding a dollar bill in your hand, you have the security of knowing that you can actually have your investment in the form of gold bars or silver coins in your hand (or in your safe). Silver is generally cheaper per ounce than gold, making it more accessible to small private investors who want to own the precious metals as physical assets. Gold and silver prices are so unstable (and have been over time) that in an economic crisis, they would only be useful to hope that someone will take your silver coins or watch and exchange a pack of toilet paper or a can of gas in return.
When you buy physical silver and not ETFs, certificates, or futures contracts, which are paper assets, you can enjoy the same benefits that gold offers. Let’s look at the gold-silver ratio, which tells you how many ounces of silver you need to buy a single ounce of gold. At current prices, the same dollar investment gives you around 80 ounces of silver more than gold. Because of silver’s volatility, it may be more attractive than gold if you want to speculate on short-term fluctuations.
Gold and silver may have similar boom-and-bust cycles, but there are some key differences to consider when deciding whether to invest in gold or when the world seems to be going crazy and the news cycle is filled with a constant stream of bad news, you may be tempted to make some stupid financial decisions, such as opting for a “better barter system” based on commodities like gold or silver. Talk to your Morgan Stanley financial advisor to find out how adding gold or silver to your portfolio can help you achieve your long-term financial goals.
