Is it better to own $10,000 worth of gold than to own $10,000 worth of silver? The answer depends on whether you think that gold prices will appreciate at a faster rate than silver prices over the period of time you intend to hold either of the precious metals. While an ounce of gold has always commanded a much higher price than an ounce of silver, astute precious metal investors know that the only way to measure the success of any investment is in terms of the percentage return.
If you are going to buy precious metals, your goal should be to earn the best return on your cash investment. It can be a difficult decision whether you should buy gold, silver, or even platinum. While gold is the most revered, and platinum the most expensive, silver may offer the greatest value. Take a look at some of the reasons why physical silver may be the best precious metal investment.
Silver Price
Although you can buy both gold and silver bullion coins in fractions of an ounce, the majority of investors and coin collectors prefer to buy them in one-ounce form. If you want to buy an ounce of gold, you will have to come up with about $1,300.
You can reach into your pocket, and for a little over $20, you can own a troy ounce of silver. Silver is commonly referred to as the “poor man’s gold” just like a donut is the poor man’s fancy French pastry.
Gold sells for roughly 65-times the price of silver. From a strictly psychological point of view, people perceive silver as being more attractive than gold when the ratio between the two precious metals is high. A lower price always creates demand and that ultimately causes the price to rise.
Industrial and Manufacturing Use
Silver has many uses. In addition to its use to produce coins, bars and rounds, silver is used in flatware, tea services, decorative items, and jewelry. It is used in photography, certain types of batteries, to pain electronic printed circuits, and to create specialty mirrors. Used in far greater amounts than gold for industrial and manufacturing applications, silver gets “used-up” which creates pressure on supply. When supply is low, prices go up.
U.S. Mint Sales of American Eagle Silver Coins are Strong
Through the first eight months of 2014, sales of silver American Eagle bullion coins totaled 27,713,500 ounces. Projected over a full year, that comes out to roughly 41,570,250 ounces. For comparison, sales in 2012 were 33,742,500 and a very strong 42,675,000 in 2013 (when silver prices experienced a big drop). Strong demand at the U.S. Mint is a positive sign for silver prices in the future.
Geopolitical Concerns
So far, the precious metals market has had a mixed response to the wars and political unrest around the world. Recent events are showing the world that the threat of terrorism is pervasive. People are afraid of a terrorist attack here in the United States. It is very possible that the U.S. and its allies will become more entangled in Iraq in the coming months. Silver, like gold is a safe haven investment in an uncertain world.
Spot silver has dropped by about two dollars an ounce over the past few months and it is now at a point where it is cheap. Consider buying physical silver because it has the potential to outperform gold and the other precious metals in the coming months.