For those who can’t afford a single ounce of gold, but still wants to invest in precious metals, there’s a common question of which is better, several ounces of silver or a half ounce of gold?
Currently, gold is trading for over $1,300 an ounce. This price tag is much higher than silver coming in at $15 per ounce. This means you can buy over 40 ounces of silver for the same price as a half ounce of gold.
The investors treat gold more like a currency than they do silver despite silver having more industrial uses than gold. So be aware of the drastic price gap between the two metals before buying.
The price of silver is currently down nearly 25% compared to the last five years. Meanwhile, gold has stayed at about the same rate. Silver prices dropped because investors worried about the slowing global economic growth. Both metals have underperformed the stock market as a whole.
Even so, experts say precious metals including platinum and palladium could be a part of a broad investment portfolio. A variety of people own the metals to hedge against substantial pullbacks in the stocks. They’re also an excellent alternative to government-backed currencies. These currencies often fluctuate more along with central bank decisions on interest rates.
Investors view the bitcoin along with other cryptocurrencies as assets similar to gold and silver in behavior. Now with the US Federal Reserve finished raising interest rates for the near future, gold and silver should see a slight increase.
Mike McGlone, Bloomberg Intelligence senior commodity strategist, says that metals are typically primary beneficiaries of the Federal Reserve catching up to futures markets priced for easing. However, he states that further hikes are not likely.
Silver is rising in popularity with those who buy
However, it’s likely silver is more attractive than gold at the moment, and not just because of the drastic price difference. A variety of commodities analysts followed the ratio and price of an ounce of gold to one of silver. Now is the time to buy if you want to get a head start. Analysts say there are typically only a few occasions when the gold to silver ratio traded is above 80. As of right now, the ratio is at 85. This ratio shows that silver is drastically undervalued according to Blanchard analysts.
That being said, should you buy any precious metals, it’s easier to do so through an exchange-traded fund which tracks the price of the metal. Turning into Scrooge McDuck and swimming around in your pile of gold coins most likely isn’t your best bet.
SPDR Gold Shares ETF (GLD) weighs in at one of the world’s most substantial funds with nearly $33 billion in assets.
Those going for silver should look into iShares Silver Trust (SLV). iShares Silver Trust has almost $5 billion in assets.
If stocks are more your speed, there are ETFs for both gold (GDX) and silver miners (SIL). The precious metal industry is currently in the middle of a significant consolidation phase. Mining stocks could benefit from more speculation from mergers.