For a long time, gold and silver have been highly sought after as stores of value and luxury items. As investment assets, both have performed well during periods of high inflation and economic uncertainty.
However, investors need to consider certain aspects of these two precious metals before deciding which one to invest in.
When it comes to weathering financial storms, gold has consistently shined in the darkest of markets.
According to data from futures brokerage firm RJOFutures, during the economic recession from 1980 to 1982, the S&P 500 index plummeted by 27%, while gold rose by 46%. Fast forward to the dot-com bust from 2000 to 2002, gold increased by 12%, while the S&P 500 index dropped by 49%.
During the financial crisis of 2008 to 2009, the Producer Price Index for gold ore rose by an average annual rate of 12.8%. It increased by 27.4% in 2010 and by 32.8% in 2011.
While silver has also achieved historical highs during difficult times, its performance may not be as stable as gold.
During the economic recession of 1980, the price of silver reached a historical peak of around $49.45 per ounce. However, during the financial crisis, prices fluctuated from a high of around $16 per ounce in 2007 to a low of approximately $8 per ounce in 2008.
These are historical data points, but what about recent developments?
Despite the Federal Reserve hinting at slowing rate cuts, which could shift investor interest from gold to interest-bearing assets, the price of gold remains robust.
The spot price of gold has dropped from the historical high of around $2,790 per troy ounce set in October 2024 to around $2,630 currently. However, analysts at Goldman Sachs still project that due to significant purchases by central banks and geopolitical tensions, the price of gold could reach around $3,000 per ounce by mid-2026.
Silver also experienced an increase in 2024. The spot price of silver rose by 21.46%, climbing from $23.65 per ounce to $28.90.
Gold is often viewed as a luxury item and a store of value, but silver’s value extends beyond that. It has significant industrial applications, serving as a crucial component in electronic products, solar panels, and electric vehicles.
In fact, according to research by Sprott, a global asset management company specializing in precious metals, industrial applications account for approximately 55% of global silver demand.
Ongoing geopolitical tensions worldwide have also led many investors to turn to silver.
However, this doesn’t mean that gold and silver cannot both be part of your investment portfolio.
Since they are both precious metals, you can invest in gold and silver in similar ways. Firstly, there are gold and silver stocks, which are shares in companies involved in the mining and use of these metals.
Here are some top gold and silver stocks:
– Iamgold Corp.
– Endeavour Silver Corp.
– Coeur Mining Inc.
– New Gold Inc.
– Kinross Gold Corp.
Alternatively, you can invest in Exchange-Traded Funds (ETFs) that track the prices of gold and silver. These ETFs invest in various stocks and are professionally managed, which may be a more practical way for beginners to invest in these metals without researching individual companies and the broader market.
Some examples of ETFs that offer exposure to gold, silver, or both include:
– SPDR Gold Shares
– iShares Gold Trust
– iShares Silver Trust
– SPDR Gold MiniShares Trust
– abrdn Physical Precious Metals Basket Shares ETF
Furthermore, you can also purchase physical gold or silver. In this case, you would need to store and protect these precious metals yourself.
Gold and silver, as valuable assets, have stood the test of time. Both serve as effective hedges against many economic recessions. However, gold has recently shown stronger performance. Despite this, both precious metals can find a valuable place in a diversified investment portfolio. But how much should you invest in gold, silver, or both? Many financial advisors recommend allocating 10% to 15% of your portfolio to alternative investments like gold and silver.
The original article “Clash of the Titans: Weighing Gold and Silver” was published on the English version of Dajiyuan Times website.
Dajiyuan Times ©2024. This article is for general informational purposes only and represents the views and opinions of the author. It does not constitute investment, tax, legal, financial planning, estate planning, or other personal financial advice. Dajiyuan does not guarantee the accuracy or timeliness of the content.