Investing in precious stones like gold and silver is one common way of commodities trading. Gold and silver vary in difference when it comes to properties and uses. To help you decide on what to invest in, here are a few comparisons between the two precious metals:
Retail Markup: Gold vs. Silver
Most precious gold or silver investors always want to buy them at a price so
close to the current security price that they can buy and sell at a specific
place and time. Otherwise, the cost of these precious metals can increase
outstandingly just for the investor to break even.
For example, if you have decided to spend some amount of as much as $1,500,
silver will have minor markup compared to gold. At the current retail prices,
with $1500, you will get silver weighing 40 ounces. With that quantity, premium
charges of $2.25 per ounce will be imposed by most companies which translates
to a premium of 6.7% over spot. When buying gold in the same amount, you will
get them in partial ounces because at the current retail price, 1oz is
equivalent to $1,785. This means that you will be paying a higher premium for
every ounce. With $1,500, you will only get gold of about 23 grams, and that
amount will only be worth $1,400, which means that you will end up paying a
premium of 7.15% over spot.
Now imagine that you have invested $15,000 in either of the metals, whichever
at the time has the least markup. $15,000 at the retail price, you will get
silver of around 425 ounces with $14,216 of spot value and, in the end, pay a
premium of 5.5% over spot. While with $15,000 when buying gold at retail price,
you will get about 8.4 ounces (the 0.4 ounces you will lay out on eleven
one-gram bars) with $14,500 of spot value, and you pay a premium of 3.5% over
spot.
So based on the premium, if you want to invest by placing $1,500 or less, then
you are more advantageous in buying silver, while if you are willing to put
more than $1,500 into the investment of the precious stones, then buying gold
will be beneficial.
Utility: Gold vs. Silver
The utility is the biggest decider among precious metals compared to other commodity investments. For other commodities, judgment value from the investors is always based on the high demand from supply to consumption. For example, in coffee beans, the investor will judge the price by looking into how much people drink and how the taste changes. Compared to other metals, precious metals like gold and silver have fewer industrial uses and consumers.
However, you will find that silver has more commercial and industrial use when you compare the two. In the market today, almost half of the bought and sold silver is commercially used in dentistry and electronics, among other things. Apart from jewelry use, gold has a fewer commercial use.
The utility comparison between gold and silver gives you a ground on which to decide and predict movements of the price of silver, considering that you can make decisions based on the factors such as the movement of the global economy and the industry need.
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Relationship to Border Market: Gold vs. Silver
Gold price usually moves oppositely to the stock market. Investing in gold is also referred to as a countercyclical investment. This is because it goes up wherever the mainstream assets fall and down when the mainstream assets rise. So when the stock market is doing bad, that is the moment many investors rush to gold. On the other hand, when the stock market starts doing well, the investors start to withdraw their money from gold and place them into assets with more significant links to the universal economy.
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Because of this, a significant number of investors control gold in their investment portfolio categorically for liquidity when there is a downturn. By now, you should have known that the worst period to sell your stocks and the best period to buy them is during a recession. So when you have a preexistent gold investment during this period, it can give you as an investor a marketable asset to sell and, in turn, get other people’s overlooked assets without exchanging your own.
On the contrary, silver usually moves altogether with the economy more than gold. It happens because the commercial application makes silver a more foreseeable asset. The price of silver goes down when the economy has slowed down, and the industries in the manufacturing sector need not so much use of silver.
Storage and Transportation: Gold vs. Silver
Of the two precious stones, gold is better than silver when it comes to storage and transportation. When you convert the amount you will get into dollars from fitting silver or gold in the same storage capacity or shipping package, gold will give you much more than silver.
The above comparison shows that silver is cheaper than gold, volatile, and the most linked to the industrial economy. On the flip side, gold is the most expensive and will be a better fit when you need to bring variety to your portfolio overall.
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