Precious metals have been a highly sought-after commodity throughout the ages, and silver and gold are very popular not only because of their lustrous beauty, but also because they are a profitable investment option in the long term.
People usually resort to buying gold and silver in cases of economic downturn, wars, and geopolitical turmoil, as well as during long periods of high inflation and high prices.
Perhaps the question that arises is: Which is better for investment and saving?
Understanding the difference between how the two metals are used, their economic sensitivities, and their technical characteristics can help you decide which metal is best for you to save and invest.
In this report, we will present to you the advantages and disadvantages of investing in each of the two precious metals, leaving you with the final decision in determining the best and most suitable metal for you to save and invest in.
Silver…the indispensable metal
Although silver as an investment is not as popular as gold, it is in fact a smart and practical investment, especially these days, as the importance of silver increases every day in the era of the Fourth Industrial Revolution due to its entry into a large and important number of industries produced by this revolution due to its high ability to deliver… Electricity and heat, which are unmatched by any other metal.
About 50% of the silver in the world today is used in heavy industry and high technology, including semiconductors, smartphones, tablets, automobile electrical systems, solar panel cells, nuclear reactors, batteries, dentistry, photography, and L-shaped chips. LEDs, RFID chips (for tracking packages and shipments around the world) and many other industrial products and applications, according to the Global Silver Survey, called the Silver Institute, a major industry group based in Washington. Name “Indispensable Metal”.
As a result, silver is more sensitive to economic changes than gold, which has limited uses that rarely go beyond the purposes of jewelry making and investment. When the economy flourishes and the industry grows, the demand for silver becomes higher and its price rises as a result. The opposite is also true in cases of economic downturn and slowdown in industrial activity. This is perhaps the biggest negative of investing in silver because its prices are linked to industry, up or down, as it is primarily an industrial asset.
However, in light of the Fourth Industrial Revolution, which is still in its infancy, and the many industries associated with this revolution in which silver is an essential component, the demand for silver is constantly increasing, and with the demand its price increases, as it is a valuable asset and will gain great value in the long term.
Given the returns, its popularity is rising day by day, as is its price, and from an economic point of view, it is a long-term investment option that can give good returns, according to what the “Policy Bazaar” platform stated in a recent report.
Gold…the safe haven
Gold has been used as a tool for trade since its discovery, and in our current era, many investors consider gold a powerful tool to protect their wealth from the erosion of value, as gold retains its value over time.
Gold has historically been a safe haven during times of market uncertainty, geopolitical tensions, or economic crises. Investors view gold as a reliable store of value that can withstand market turmoil and provide stability. In such periods, demand for gold tends to increase, leading to a rise in… Its price.
As a result, many investors keep gold in their investment portfolios, especially if they need liquidity during an economic recession.
A recession is the worst time to sell stocks but the best time to buy them, so having a prior investment in gold can give you a valuable asset to sell during a recession so you can buy other people’s undervalued assets without selling your own.
Gold or silver?..a historical comparison
To understand more which is better for saving and investing in the long term, we will conduct a historical comparison of the prices of both metals over the years.
At the end of 1925, the price of an ounce of gold was $20.63. At the end of 2020, an ounce of gold was sold for $1,893.66, and over a period of 95 years, the precious metal achieved a compound return of 4.87% annually.
It is noteworthy that gold prices ended the year 2023 at a level close to 2063, after reaching a record level of 2100 during the month of December 2023.
At the end of 1925, the price of an ounce of silver was $0.68, and at the end of 2020, an ounce of silver was sold at $17.14, and over a period of 95 years, the precious metal returned a profit rate of 3.46% annually.
It is noteworthy that silver prices closed above the level of $24 by the end of 2023.
This means that gold performed better than silver as a long-term investment, says Dr. Robert R. Johnson, professor of finance at the Haider College of Business at Creighton University, according to what the Bankrate platform recently reported.
However, we must remember that the Fourth Industrial Revolution is still in its infancy, and silver is entering as an essential component in many new and emerging industries, as silver is considered an industrial asset while gold is considered an investment asset because it is not included in many industries.
Hence, investing in silver may be better in the coming days, leaving the decision up to you in the end.
