Gold-Silver Ratio: When to Buy Silver Over Gold?

Last Updated on May 20, 2021 by MoneyVisual

While gold and silver are both safe haven, precious metals that many investors put money into, they have key differences. If you’re new to the space, you may wonder when buying silver is better than gold, or vise versa. In this guide, we’ll break down when to buy silver over gold.

Silver is Volatile

Note that gold is more expensive than silver, and silver is more volatile than gold. This means that while the former fluctuates in price, the latter will remain steady much longer. Basically, many advise not to invest in silver when it’s high. If the asset is at a low point, however, it’s certainly a better investment than gold. You can expect that price to go up much sooner than gold will rise.

When the Gold-Silver Ratio Says So

The gold-silver ratio tells how much silver is worth the current price of gold. The latter is more expensive, after all. This ratio is found by dividing the price of an ounce of gold by the price of an ounce of silver. This can help tell you when it’s best to invest in one of these assets.

If the ratio rises, that generally means it takes a lot more silver to hit the price of gold. Essentially, the price of silver is low, and one should consider investing. Of course, if the ratio is lower, silver’s price might be closer to gold’s and more stable for the time being. It’s usually better to wait for a dip before investing in that case.

This ratio is often in the range of 40 to 80, according to various experts.

If You’re Low on Funds

If you only have a small amount to invest, silver is the better option. For one, the asset is cheaper than gold. You know it’s a reliable investment as the metal is used in various industrial functions. There will never be a time where silver is useless. That way, you know your small investment won’t go to waste.

It’s also worth noting that physical silver is much easier to sell back for a profit. Gold bars often depreciate over time, and some places charge high fees to buy the asset from you. Simply put, silver is much easier to manage when it comes to selling physical bullion.

You Have a Ton of Storage Space

Physical silver takes up a lot more space than gold does. This is largely due to the fact that gold is much denser than silver is. Smaller silver bars means more silver bars to equal the same or a similar value.

That said, if you have a safe with a ton of space or another secure space without much in it, silver is a good investment to make.

The Global Economy is Doing Well

Silver is insanely popular when it comes to industrial use. The asset is used in electronics, batteries, solar panels, and more. This means that when the economy, and these industries, are doing well, silver is bound to react positively.

Even if the global economy is performing poorly, consider that investors may use silver as a safe-haven asset. While the price is unlikely to reach economic boom heights, it has the potential to rise in either scenario.

You Want a Short-Term Investment

Considering silver is much more volatile than gold, you should invest in the former if you’re looking for a short-term asset. Silver’s price bounds around so much that it’s unlikely you’ll hold it for an incredibly long time.

While gold’s value remains steady and generates less short-term profit, it’s better for long-term holding. Always do your research before investing in anything – precious metals or otherwise. Only invest what you can afford to lose, and you’ll be set.