There is an ongoing discussion regarding whether one should invest in silver or gold. Both metals have their appeal, for many of the reasons we continue to discuss. But each has certain characteristics and distinctives that the investor should consider before making a decision.
One very valid argument is that gold is easier to transport and more universally recognized for its value. Furthermore, it is more stable in its value. With this in mind, an investor’s first core position should likely be personal possession of gold.
In determining what is best for you, differentiating between trading and investing would be helpful. When investing one has a long to medium term outlook. We’re not concerned with short-term movements. In such a case, physical ownership is likely best. This is true whether one uses a vault, either through investment services such as HAA or a self-directed IRA, or takes personal delivery from a reputable dealer.
The trader is only interested in short-term movements. This is a unique form of investing that most of us should avoid. Very few are able to successfully navigate the troubled waters of the trading world. For those who pursue such a course, ETFs or similar instruments such as Sprott’s PSLV or PHYS are viable sources, as are vaults that allocate metals including, in some cases, IRAs. Not all IRAs allow for trading, however, so please make sure to discuss this with an expert if interested.
For a trader, volatility is attractive. For this reason many of them prefer silver. However, silver’s volatility makes it more dangerous for trading as well, since movements can be more erratic, dramatic and unpredictable. Gold, on the other hand, is a bit more stable and predictable, offering for safer trading. Again, this is relative since trading can be highly unpredictable and extremely difficult.
For investment purposes, in some ways silver was largely ignored until about a decade ago. There were some of us who had bags and some silver dollars. But gold was the focus more than silver fifteen years ago.
In recent years a lot of information has surfaced suggesting that silver may have much greater potential than previously realized. Among these is the realization that the amount of silver mined is only about eight times that of gold, in spite of about a 15/1 ratio of their existence in the earth’s crust. Thus, the lobsided expected ratio value is readily apparent. However, ratio alone does not determine price, since demand can come in many forms and from many sources.
These are all reasons that many investors and analysts prefer silver. Much in regard to this is personal and relates to goals, portfolio size, personal philosophy and so forth. But hopefully we’ve given you reason to consider your current investments and how they’re allocated. Tomorrow we’ll look at some more reasons, as well as some considerations for gold.
For your prosperity,
J. Keith Johnson