Negosentro.com | Investing In Gold Vs. Investing In Silver: What Is The Best Way? | Investing in Gold or silver has always been a debatable issue. Both precious metals have their steady graphs of growth and hence are popular among the investors to shield their financial instability in the long run. Against traditional ways of acquiring the physical possession of gold and silver, the advanced mechanism of today allows trading in gold or silver or any other precious metal via the stock exchange.
However, there are certain things that every investor should consider before proceeding with investing in gold or silver.
Things you should consider before buying gold or silver
Most of the buyers invest in gold and silver by buying it in its physical form. With a wide range of options, novice investors always find it difficult to decide how to invest in gold or silver. Limited edition of gold is a good choice or investing in the sovereign coins; investing options are numerous.
Considering the premium on the gold spot prices, investors also consider bullion as a sensible option. With unscrupulous dealers present in the market, buying gold or silver comes with a huge premium. Hence, it is imperative to have a deep understanding of these metals before making an investment decision
Here are the essential factors which every investor should consider before trying their hand in buying Gold or silver:
What is the best way to invest?
Physical metal like bullion coins or bullion bar is the right way to invest. Gold exchange-traded funds (ETFs) are another suggested way worth considering. It is convenient to invest in precious metals via ETS. However, an investor should have sound knowledge about this method to proceed with. Under this method, the investor does not have the physical delivery of the metal. Hence, in case of need, an investor cannot take the delivery and has no claim on the physical gold within the fund.
However, you own gold under an ETF, which can be stored as an asset. Buying gold via ETF makes the investor rely on the financial institutions for delivery obligations. Hence, ETF is a commercial product which helps the investor to invest in precious metal, without owning it in physical form
Which is better – Bullion bars to bullion coins?
Bullion coins are considered to be ideal precious metals worth investing in. These are easy to trade, easily recognizable, and even fetch pricing at the excellent pricing at the time of sale. However, the transaction cost associated with the bullion coins is generally higher. Small bullion bars like 1 oz bullion bars have higher transaction cost and harder to sell back.
If you are an institutional buyer who wants to buy large quantities of metal, buying large bullion makes sense. Lower premiums are associated with large quantities as well. Coins are easy to trade and highly liquid for most of the traders.
Which bullion coins are the best buy?
Once you are sure about the method of trading, next comes the type of bullion coins worth considering for investment. Sovereign coins from lesser known countries should be avoided. American Eagle, The South African Krugerrand coin, and Canadian Maple Leaf coins are some of the famous bullet coins which are worth considering. North American silver and gold coins are best to find for short term investing
How to get the precious metal for investment physically?
Online dealers offer the best pricing deal and are often considered as best. Unless there is an emergency, an investor should not take the physical possession of the precious metal. It is safe to secure your bullion in a secured vault to maintain the chain of custody. Online dealers are best, but you should also explore the various offers to get the right conclusion.
An allocation to the various metals is the best way to avoid keeping all your eggs in one basket. The global economy today is associated with lots of ascertaining events. An ideal investment strategy is to diversify your investment portfolio and insist on physical possession to ensure the safety of your investment.
Investing in Gold Vs. Investing in Silver
Here are the critical differences in investing in Gold or Silver:
The pricing of silver is volatile, making with 1 billion ounces of supply. The supply of gold is restricted to 120 million ounces. However, the lower pricing of silver makes the annual supply value relatively small. However, this makes its price volatile too.
The lower price of silver makes it more affordable. Like gold, even silver is a hard asset and money just like gold. All the gains must be reported to the Income Tax department. However, silver allows you to keep some benefits and profits confidential. All these advantages at par with gold are available with Silver.
The higher industrial use of Silver has a more significant impact on its demand. It makes the silver more susceptible to economic busts and booms. The deflationary condition is the only condition when the silver may not do well.
What are the various investment vehicles available?
If you are looking forward to investing in gold or invest in silver, here are the various investments available in this regard:
Bars and Coins
Traditionally, to buy a piece of precious metal like gold or silver, you need to buy it in physical form. Hence, you receive the actual delivery of metal irrespective of the quantity you buy. Retail investors can purchase even the Silver bars of 100 troy weighing 6.8 pounds.
Coins are equally shared among investors. One-ounce American Silver Eagle and one-ounce, 99.99% pure Canadian Silver Maple Leaf are the popular options to invest in silver.
Started in the 21st century as the way of tracking the prices of many commodities, Exchange Traded Funds (ETF) are typical for gold, silver, crude oil, natural gas, and many other commodities. They help identify the spot future move and can be traded like stocks.
ETF for silver or gold can be traded in the brokerage account. You can easily participate in the price movements of gold and silver without having physical delivery. Thus the ETF emerged as a convenient way to invest.
The companies which mine for the silver or gold or other metals are referred to as the mining companies. Buying the share of these companies also gives exposure to the respective markets. You can invest in many base metals like Zinc, copper, lead, and tin by purchasing the shares of their mining companies.
Without tracking the actual price of Silver, investing the shares of Silver Wheaton (NYSE: SLW) gives you exposure to Silver. As the costs of base metal rise, it helps the companies to witness the surge in their share prices.
What is the ratio of Gold-Silver?
To track the historical price trends, traders today have found many incredible ways and methods. Price to earnings ratio (PTE) is one such way that gives analytics in terms of relative value instead of absolute price to make a better decision.
Both silver and gold are highly volatile and require thorough knowledge before investing. They foresee the severe price swings and are traded from a day-to-day basis. It is best to buy for the long-term instead of trading over the head. Silver is not-so-popular among the leading stream investors as the gold is. In the past few years, the Great Recession and the European Debt crisis refrain the investors. But to hedge the economic instability, Gold and Silver are the best to invest to balance your portfolio.
Is it judicial to invest in Gold or Silver?
Precious metals like gold or silver have always been the coveted commodities for investment from ages. It is a lucrative investment option that is smart yet practical. The investment in silver is not as popular as the gold is, but the price of silver influences the variation in the rates of gold. Even the silver has excellent potential to yield good returns if invested judicially. Silver is a highly conductive metal for heat and electricity and known for its malleability as well as ductility. Hence, it has many industrial and trade uses, as well.
However, the gold has been an undisputed choice of investors for its excellent return yielding capacity. For gold and silver, a significant increase in demand and supply has already been accounted for. Although silver is not as popular as gold, investors now are trending to invest in Silver as well. Industries all over the globe have unprecedented demand for silver while the supply is restricted makes it a preferable choice to invest under the current scenario.
To get the right returns, both silver and gold should be considered for long term investment. The purpose of storing up assets like Gold, silver, and other precious metal is to cope against inflation and financial instability.
Investing in gold or silver is the matter of an in-depth understanding of the volatility of these precious metals. If you are planning to invest, you should conduct extensive research to proceed further with investment.