Silver is more volatile, cheaper and more closely linked to the industrial economy. Gold is more expensive and is better for diversifying your overall portfolio. One or both of them may have a place in your portfolio. Perhaps the best use of gold as an investment is to mitigate portfolio risk
.
In contrast, central banks hold over 34,000 tons (1.09 billion ounces) of gold in official reserves. The dollar could not be converted into gold since President Richard Nixon ended this practice in 1971. [1] Before that, people bought gold bars to diversify their investment portfolios and protect them from inflation. While short-term fluctuations in the price of gold attract a lot of attention, gold is relatively stable as a long-term investment. You can buy gold coins and bars in small denominations (from half an ounce to a twentieth of an ounce in some cases), but premiums for products under an ounce go up
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Gold and silver may have similar boom-and-bust cycles, but there are a few key differences that you should consider when deciding whether or not to invest in gold. Because of silver’s volatility, it may be more attractive than gold if you try to speculate on short-term fluctuations. 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. There aren’t many times you can bring a bag of gold chains to the gas station and trade it in for a tank of gas
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On the one hand, investors often pay a premium over the spot price for gold and silver coins due to manufacturing and distribution premiums. In a bear market, investors not only drive up the price of gold, but the yellow metal is also relatively protected against a slowdown in economic activity because industrial use is so limited. The prices of gold and silver are so unstable (and have been over time) that in an economic crisis, they could only be used to hope that someone will buy your silver coins or watch in exchange for a pack of toilet paper or a can of gas. 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.
And as Dave says: “Since the Roman Empire, gold has never been used as a medium of exchange for a collapsed economy. Unless you want to get into jewelry making, investing your hard-earned money in precious metals like gold, silver, and platinum isn’t the best use of your money. When you think of the world’s obsession with gold, it’s easy to get caught up in adventures and mysteries such as looking for gold during the gold rush, pirate ships, and treasure maps. So if you buy as an investor during a bull market, history says silver offers you a higher return than
gold.
