Buy Silver vs. Buy Gold – Which is a better investment?
The ever perpetual question regarding gold and silver investments always revolves around which one is better than the other. Clearly you have advocates for both, and they both have compelling arguments. This article will try to explain both sides of each argument. As with all investments it is always up to the individual investor what to buy and in what proportion to the other investments in the portfolio.
Taking sides in this debate is honestly a waste of time in my opinion. Each precious metal has their cultural biases and as such it is hard to argue with someone who does not reason rationally. Exploring each side however will show the merits of each investment, so really this is definitely worth exploring.
Silver Prices Are Taking Off
The rise in silver is clearly evident and the recent news simply points to a further increase in the price with very little reason for any drop off. Only recently the United States Mint reported that they sold out of their inventory of Silver Eagle coins, this lack of inventory of investment grade products is surely going to cause the price to go up.
Is this purely speculation? Is silver being manipulated as it once was in the past? Those are certainly possible scenarios and there is certainly enough reason to believe that this may just be speculation. However, you must also realize the fundamental nature of the reasons why this precious metal has increased in price.
Simply put there are just not enough open and active silver mines on this planet to satisfy the current demand. Since silver is used in many manufacturing processes and has other uses then just cosmetic the demand for this metal is always present. This is not just a luxury item reserved for the exclusive wealthy and the aristocrat class in the world.
By the rules of supply and demand then this is a natural occurrence. However, the current surge in the interest in gold and silver backed IRA’s have caused a bump in prices that many economists may argue was artificial or pure speculation. To be completely honest they may be correct in that assertion. Whenever you get any large group of people all buying the same thing for the same reasons there is going to be a bubble effect occurring, and eventually that bubble may burst at any time.
Currently the trend for the prices of silver seems to be going up with no significant pullback seen in the coming months. Any investor then would be truly out of their mind if they did not put some money into this, doing otherwise and you lose out of potential gains.
The Argument for Investing in Gold
Gold buyers have recently been painted with the same brush as those who are prepping for the end of the world. While some may just brush this off as a foolhardy venture others see buying gold coins and bars as a solid way to secure their future and to hedge against any major catastrophes in the world markets.
One reason why people buy gold bars and coins is simply to ensure that they have something to live on when they get older. As well since every currency right now is based upon a fiat system there is nothing really securing the value of any Dollar, Yen, Yuan, Pound, or Euro.
Some have stated the interest of the United States treasury to return the United States Dollar to a gold standard, this however has been denied numerous times. If that should happen however, and there may be a slim chance, then any gold or silver you may own will be worth significantly more then when you purchased it.
The current speculated price of gold is 3 thousand dollars per ounce that means at this time the price of gold could double in a decade or just several years. Now, I am not saying that the current price of gold is 3 thousand dollars per ounce but rather that is its predicted high. So, by looking at the current price and comparing it with its potential price you can see there is plenty room for profit.
But purely looking at the potential upside of any asset is not a wise way to invest; rather you should look into other factors that may affect its future. For instance, for Gold, the amount of inventory available is quite high. Some have stated that the current inventory of gold can last the world 500 years or more. Then using that assumption you could make the argument that investing in silver may be a better investment as there is simply less of it to go around.
As well you must consider the statements made by India and China where they came out and stated that those countries will stop buying up the reserves of gold in the next coming years. While those two countries have invested a significant amount of money into buying gold if they should stop how that will affect the market price of gold?
At any time there could be a deciding factor that lowers the price of gold, but again this could be said of any investment. Should you not buy gold now because you believe in the future the price could be significantly lower? That really is a personal decision and ultimately you must find what the most comfortable price point is for you and your future retirement.
So What Choice Will You Make?
Clearly investing in silver and gold is something to consider, adding a gold backed IRA fund to your overall portfolio of investments is simply going to ensure you are well diversified. The amount you invest in proportion to the rest of your assets is something you will have to be comfortable with.
The argument for investing in silver is quite strong, just as the argument for investing in gold. The proponents of both sides have compelling arguments and that is why I choose to not take sides on this as both are solid investments.
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