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Silver vs gold: What is the primary difference from an investment standpoint?

By Finserv MARKETS - Aug 2,2019
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Silver vs gold: What is the primary difference from an investment standpoint?

Gold and silver are the most common precious metals that are traded by investors in a bid to diversify their portfolio and maximize their returns. Both are rare metals found within the Earth’s crust and are mined before being used. While gold’s presence on Earth is measured at 0.004 parts per million (ppm), silver is measured at 0.075 ppm.

However, owing to their rarity, they function as excellent investment instruments. Investors turn to precious metals as an investment tool when they are faced by economic or political instability, both of which lead to fluctuations in the equity market. Their popularity stems from the fact that they are tangible investments, and have lower volatility as a result. Some of their more appealing characteristics are that they are both finite, divisible, portable, and also highly liquid, which means they can be easily sold in case you are in need of quick cash.

To invest in gold or silver does not require too detailed a technical analysis, as is required before investing in the equity or any securities market. Investing in gold has achieved such popularity in India that the trade has even moved online, especially with the advent of digitalisation and e-commerce. Digital Gold, available on Finserv MARKETS, allows for sale and purchase of gold, and even allows you to store your gold safely online thereby saving you the cost of renting a locker to ensure the security of the gold you buy. Anytime you wish to use digital gold, you can choose to redeem it in its physical form either as gold coins or bars. The gold will be delivered to your residence, along with an Assay-certified letter of authentication.

If you are planning to invest in a precious metal, but are unsure of whether to invest in gold or silver, read on below to learn the main points of difference between investing in gold and silver.

  1. Silver is a more affordable investment: Just like gold, silver also carries the advantages of being a tangible asset that cannot diminish in value and will act as a hedge against inflation. However, silver’s advantage over gold is that it is priced much lower; allowing it to be a cheaper choice as an investment instrument, as compared to gold. All the benefits that come with investing in gold are still accessible to you, but at a much lower price! On the flip side, the resale value of silver would also be comparatively lower than that of gold.
  2. Silver requires more space than gold in terms of storage: The same amount of money will buy you a considerably larger amount of silver than it will of gold. Additionally, pure silver is 84% larger in volume than pure gold. This means that silver will take up more space for storage than gold, leading to increased costs. Additionally, silver will tarnish over the long run, which is not a concern you would have with gold. Thus, silver needs to be stored in a dry with no exposure to the elements. Maintenance required for storage once you invest in gold will be much lesser than if you invest in silver – which makes gold a more attractive investment option. With Digital Gold, available on Finserv MARKETS, you don’t even need to worry about storage facilities since the gold will be stored in your online account until you decide you decide to redeem it in its physical form.
  3. Silver stockpiles are dropping, gold aren’t: All over the world, governments and central banks hold gold reserves which can be used to tide over any unforeseen financial emergencies. While these institutions used to previously hold onto silver, they do not anymore since the metal is no longer used in coinage. Since banks and governments continue to invest in gold on a fairly regular basis, demand for the yellow metal is much higher leading to its prices being higher as compared to silver.
  4. Silver enjoys greater utilisation in industries: Silver, owing to its properties of being electronically conductive, thermally conductive and reflective; enjoys a great deal of application in industries across consumer electronics to medical equipment. As a result, the implications of an economic crisis will reflect on the prices of silver as well; which will not be the case if you invest in gold. In case of an economic crisis, the demand for silver from industries will fall leading to a fall in its prices. Since the use of gold within industries is negligible, the state of the industry or the economy will not cause any impact to the price of gold.
  5. Gold prices are less volatile than silver’s: Silver prices are extremely volatile, as compared to gold or any other investment class. This means that not only do silver prices crash much more than gold when the market is unfavourable, but they also rise much higher when market conditions are good. If silver is bought during a bull market, it is likely to generate higher returns as compared to gold. On the flip side, the bear market will see silver prices falling much farther than gold.

Now that you know the major differences between gold and silver as investment classes, you can study your options better and choose to invest in gold, or silver, or even both! With Assay certified Digital Gold, available on Finserv MARKETS, investing in gold has become a whole lot simpler. You can transact online, and you don’t even need to make any storage arrangements immediately since your gold will be stored in an online account until you decide to redeem it as physical gold.

“Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere”!

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