Skip to Content

Investing in Gold Vs Silver Online in USA – Which is the Best

Are you confused about whether to invest in gold or silver for high returns? If YES, here are 17 best profitable ways to invest in gold and silver online in USA.

Whether to invest in silver or gold has for a very long time been a dilemma that is faced by a lot of potential investors. This is one of the questions that gold and silver investors will like to have a concrete answer to irrespective of if they are new to investing precious stones or if they have being stacking them for years.

Investing in Gold Vs Silver Online in USA – Which is the Best?

  • Investing in Gold

There are several ways by which an individual can invest in gold. Gone are the days when investing in gold was just limited to buying the physical gold itself. Nowadays, you can invest in gold without even having to see the gold you are paying for.

To invest in gold, you will have to review the various gold-related investment products, all of which have difficult risk and return profiles, liquidity characteristics and fees. Usually, an asset allocation strategy will consider long-term versus medium-term return. Here are the various methods by which one can invest in gold.

5 Ways to Invest in Gold

  1. Buying physical gold (bars and coins): the demand for physical gold, coins and bar has greatly increased since the early 2,000’s. In fact, it is estimated that it accounts for about two-thirds of annual investment in gold and about one quarter of global gold demand over the past ten years.
  2. Gold backed ETF’s: physically backed gold exchange traded funds (ETF’s), exchange traded commodities (ETC’s) et al. are responsible for about one-third of all investments in gold. Gold backed ETF started in the year 2003 and since then, they hold over 2,300 tons of physical gold on behalf of investors around the world.
  3. Buying into allocated gold accounts: bullion banks as well as gold dealers offer their customers gold accounts. These gold accounts are made up of gold deposits that to a large extent resemble currency accounts. In the event that a customer makes an order for gold, the bank will purchase the gold for the client and electronically book the transaction into the account.
  4. Futures, forwards and options: this is one of the most technical forms of gold investment because investing in gold derivatives requires an in-depth knowledge of how financial securities work. Gold derivatives can be traded over the counter (OTC) and also on exchanges.
  5. Buying gold mining stocks: it is also very possible to invest in gold by buying the share of a gold mining company. Most a times, the gold mining company share correlates with the gold price. It should however be noted that the amount of return you will get on the stock will be determined by how well the gold mining company is faring in business as opposed to the value of the gold.

Investing in Silver

Just like investments in gold can take a variety of form, the same can be said for silver too. You can either decide to invest in the physical silver or purchase a financial security with the price of silver. One main method of investing in silver is by buying silver coins and bars.

These coins and bars are usually made of (nearly) pure silver and they are normally traded at a small premium above the value for silver. Silver bars can usually be purchased from major banks or bullion dealers. Silver can also be invested in by way of ETF’s and as well as silver mining stocks or sliver streaming companies.

Investing in Gold Vs Silver – Which is the Best?

1. Volatility: silver is a lot more volatile when compared to gold. The total supply of new silver each year is close to one billion ounces while the annual gold supply is around 120 million ounces. Taking this data at face value, it will invariably suggest that the silver market is 8 times as big as gold.

This however can not be further from the truth. This can be attributed to the huge price difference between the two precious metals. Gold out values silver by almost 9 times and as such, it can be said that the annual gold supply is more than that of silver.

Silver is a lot more volatile when compared to gold because it takes a lesser amount of money to be able to impact the price more than gold or any other asset. Due to this, silver will rise more than gold on down days. This phenomenon is known as volatility. In that vein, it will not be advisable to go ahead to buy if you will panic and sell at the first price drop.

In addition, the gold market has more market capitalization and more liquidity. When precious metals are in a bull market, silver tends to outperform gold but when they are in a bear market, silver tends to drop more than gold.

2. Silver is more affordable: even though silver shares many similarities with gold, it is obviously a lot cheaper than gold. In fact, an ounce of silver goes for $17 while an ounce of gold goes for as much as $1,315.30. Due to its cheap nature, silver is a lot easier to sell off. Also, its low cost of purchase makes it a budget friendly gift to give to someone.

3. Storage space: even though the cheap price of silver is advantageous, it is not without constraints- one of them being that is takes up a lot of storage space. At the current market price, the same dollar investment will get you about 70 ounces more of silver than gold. In addition, pure silver is 84 percent larger in volume than pure gold. What this implies is that the silver will take up 128 times more space than gold that was purchased for the same price.

In addition, silver will tarnish after a (long) period of time especially if it is exposed to the elements. With gold, you do not have to worry about such issues. Due to this difference in bulk and technicalities of storage, silver will attract more additional charges in a professional storage. It also presents similar challenges when transporting it from one location to another.

Another factor that should be considered here is the silver to gold ratio. This ratio basically shows how many ounces of silver will equal an ounce of gold under current market prices. The change in price between silver and gold is almost always correlated. If gold goes up, so does silver and vice versa.

4. Industrial application and use: industrially, only about 12 percent of gold supply is being used. On the other hand, a whopping 56 percent of silver is being used industrially. Silver has a lot more industrial application that is needed on a day to day basis.

This is important because the state of the economy can affect the demand for more or less silver thus it is susceptible to economic booms and busts. Unlike gold however, most silver that is used industrially cannot be recovered or recycled.

In conclusion, gold and silver are very volatile commodities and as such, investing in them is not for the faint-hearted. These precious stones are not products that can be traded on a day to day basis. Due to this fact, at times, silver may be the better buy while a times gold may be the better buy. It is advisable to diversify between these two metals rather than just sticking to one.

Even though no one can correctly predict international and domestic markets, experts believe that investors who are intending for a short term investment of say 3 to 4 years can invest in silver whereas people who are into long term investments should got for gold.

Irrespective of the choice you finally settle for, the power of diversifying your investments cannot be over emphasized.