Which precious metal is the best investment choice for 2023?
With gold and silver prices fluctuating in recent years, deciding whether taking a chance on one makes sense can be difficult.
The key to making an informed decision lies in understanding the correlations between gold and silver pricing and their respective utility factors.
If we use price growth in the commodity from 1990 to 2023 as a measure, then Gold just beats Silver (see chart below):
Gold: 566% : $330/oz USD to $1868/oz USD
Silver: 473% : $5/oz USD to $23.68/oz USD
This article will look at a gold vs silver investment and how best to invest in either asset class.
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Gold and Silver: What are the ways to own these Precious Metals?
Investors have several options to choose from when investing in the gold market or silver market. Those looking to invest in gold and silver coins can purchase physical bullion, stored at a depository.
Investors can purchase gold or silver-based financial products such as exchange-traded funds (ETFs), futures and options contracts, and gold or silver mining stocks through their traditional brokerage account.
ETFs follow the price of gold or silver, allowing investors to trade them like stocks with low transaction costs.
Investing directly into Gold and Silver mining companies gives investors access to the company’s assets and production capabilities. Mining companies are considered speculative investments.
Gold Investment Assets
- Buying physical Gold by directly owning physical bullion ,i.e. bars or coins.
- Investing in a Gold IRA
- Investing in Gold ETFs, i.e. Exchange-Traded Funds
- Investing in publicly-traded Gold Stocks
- Investing in private Gold Mining Companies
Silver Investment Assets
- Buying physical Silver by directly owning physical bullion ,i.e. bars or coins.
- Investing in a Silver IRA
- Investing in Silver-based ETFs, i.e. Exchange-Traded Funds
- Investing in publicly-traded Silver Stocks
- Investing in private Silver Mining Companies
Gold vs Silver Investment Performance
Gold Performance: Period Returns
| Period (Jan 1 Prices) | # Years | Start Price | End Price | Performance |
| 2022 – 2023 | 1 | $1,800.10 | $1,824.16 | +1.3% |
| 2020 – 2023 | 3 | $1,520.55 | $1,824.16 | +20.0% |
| 2018 – 2023 | 5 | $1,312.80 | $1,824.16 | +39.0% |
| 2013 – 2023 | 10 | $1,681.50 | $1,824.16 | +8.5% |
| 2008 – 2023 | 15 | $840.75 | $1,824.16 | +117.1% |
| 2003 – 2023 | 20 | $342.20 | $1,824.16 | +433.2% |
Gold’s performance has been excellent over the last 1,3,5,10,15, and 20 years. It has had period returns from the more recent 2022 to 2023 period of 1.3% to the 20 year return of 433%.
Silver Performance: Period Returns
| Period (Jan 1 Prices) | # Years | Start Price | End Price | Performance |
| 2022 – 2023 | 1 | $22.81 | $23.96 | +5.0% |
| 2020 – 2023 | 3 | $18.05 | $23.96 | +32.7% |
| 2018 – 2023 | 5 | $17.21 | $23.96 | +39.2% |
| 2013 – 2023 | 10 | $30.87 | $23.96 | -22.4% |
| 2008 – 2023 | 15 | $14.93 | $23.96 | +60.5% |
| 2003 – 2023 | 20 | $4.74 | $23.96 | +405.5% |
Silver has performed well over the more recent 1,3,and 5 years. However, Silver’s performance was -22.4% over the last 10 years. It has a 20 year return of +405%.
Gold Performance: Annual Returns
From 2004-2023, Gold has mostly returned positive performance in 14 of 20 years.
In 2010, Gold experienced a peak performance of +29.24%.
It recorded its worst return of -27.33% in 2013.
Silver Performance: Annual Returns
From 2011-2022, Silver has returned positive performance in 4 of those 12 years.
In 2020, we saw a peak performance for this precious metal of +47.89%.
And its worst return of -35.84% in 2013.
Investing in Gold
As a reliable hedge against rising inflation and economic uncertainty, gold has long been one of the most well-liked precious metals among investors. Because of its propensity to increase in value during market turbulence or economic downturns, gold is arguably the best safe haven asset.
Gold does not pay interest or dividends, unlike other investments like stocks or bonds. Thus there is no need to be concerned about interest rate changes or other outside factors depreciating its value over time.
Gold gives investors significant liquidity because it can be bought and traded readily on international markets. If desired, it may also be purchased physically as coins or bars.
Investing in Silver
Silver is another precious metal with many industrial uses, such as electronics, solar panels, and medical equipment. It also has several properties that make it an attractive investment option.
Silver and Gold prices are somewhat correlated, And both metals can be influenced by various factors such as economic conditions, supply and demand dynamics, and geopolitical events.
Silver is not as rare as Gold, and its prices can be affected by changes in central bank policies that impact currencies. However, Silver is often considered a more accessible investment for individual investors due to its lower price point.
Investing in Silver can provide a hedge against inflation and currency fluctuations and diversification for a portfolio. Conducting thorough research and considering the risks and potential rewards before investing in Silver, as with any investment, is essential.
Liquidity
One must consider liquidity when weighing investment possibilities such as Gold vs Silver in 2023.
Illiquid assets cannot always offer this flexibility, but liquid assets can be swiftly turned into cash when necessary.
As mentioned, both metals trade on international markets. Still, due to differences in trading volume and market size, one must always consider how easily one can convert one into cash.
As part of managing portfolio risk, it is important to note that both gold and silver have good liquidity in world markets.
Gold Silver Ratio: Which is more precious?
| Year | Gold Average Price | Silver Average Price | Gold to Silver Ratio |
| 2023 | $1,885.76 | $22.53 | 83.7 |
| 2022 | $1,801.87 | $21.76 | 82.8 |
| 2021 | $1,798.89 | $25.14 | 71.6 |
| 2020 | $1,773.73 | $20.69 | 85.7 |
| 2019 | $1,393.34 | $16.22 | 85.9 |
| 2018 | $1,268.93 | $15.71 | 80.8 |
| 2017 | $1,260.39 | $17.07 | 73.8 |
| 2016 | $1,251.92 | $17.17 | 72.9 |
| 2015 | $1,158.86 | $15.66 | 74.0 |
| 2014 | $1,266.06 | $19.07 | 66.4 |
| 2013 | $1,409.51 | $23.79 | 59.2 |
| 2012 | $1,668.86 | $31.15 | 53.6 |
| 2011 | $1,573.16 | $35.12 | 44.8 |
| 2010 | $1,226.66 | $20.19 | 60.8 |
| 2009 | $973.66 | $14.67 | 66.4 |
| 2008 | $872.37 | $14.99 | 58.2 |
| 2007 | $696.43 | $13.38 | 52.1 |
| 2006 | $604.34 | $11.55 | 52.3 |
| 2005 | $444.99 | $7.31 | 60.9 |
| 2004 | $409.53 | $6.66 | 61.5 |
The table above shows the average price of Silver and Gold precious metals from 2004 – 2023 and the ratio of gold to silver.
Last 20 years: If you take the average from 2004 – 2023, we have a Gold to Silver price ratio of 67.4.
Last 15 years: If you take the average from 2009 – 2023, we have a ratio of 70.8.
Last 10 years: If you take the average from 2014 – 2023, we have a ratio of 77.8.
Last 5 years: If you take the average from 2019 – 2023, we have a ratio of 81.9.
Based on the average of the last 20 years, the historical gold-to-silver price ratio has been around 67.4. (2004-2023). This ratio shows investors have not noticed a sizable price differential between Gold and Silver.
The gold-to-silver price ratio has been approximately 81.9 for the past five years (2019-2023), suggesting that Gold has gained relative worth compared to silver.
Generally speaking, Gold is rising in value over Silver over time. Several elements, such as the evolving industrial applications, the global market climate, and the rising demand for Gold as a safe haven asset, bring this on.
A growing gold-to-silver ratio shows that Gold has recently become more valuable than Silver. But, when choosing which precious metal is more valuable, investors must consider several variables, such as supply and demand, the state of the economy, world politics, and industrial uses. They must also regularly follow the market to make an informed decision.
Characteristics Of each Precious Metal
Each metal’s supply and demand dynamics impact its price differently. A complex range of factors, such as economic conditions, supply and demand, geopolitical events, currency fluctuations, and investment demand, influences the prices of Gold and Silver.
Supply and Demand
Gold is a rare and precious metal, with an availability of just 10 parts per billion in the Earth’s crust. It has been highly sought after for its beauty, malleability and resistance to corrosion since ancient times, and it continues to be used as both jewelry and currency today. Silver is also highly prized for its beauty and versatility, but unlike Gold, it is more abundant and typically less expensive than gold.
Physical Properties
The standard size for gold coins is 1 troy ounce (31.1035 grams), while the size for silver coins is 1 troy ounce (31.1035 grams).
Gold coins and bars come in various sizes, making buying the amount you need easier without purchasing large quantities. Silver coins and bars are typically available in smaller sizes, so buying larger amounts can be more expensive.
Some other properties of Gold and Silver:
- Gold is heavier than silver, with a specific gravity of 19.3 compared to 10.5 for silver,
- Gold is much harder than silver, making it more durable,
- Gold is less reactive to oxygen and water, making it more resistant to corrosion and tarnish,
- Gold has a higher melting point than silver (1064°C vs 960°C)
Industrial Uses
Gold is more valuable than Silver due to its rarity, beauty, and malleability. Its use includes jewelry, investment coins, watches, art objects and electronic components. Silver has many uses, including jewelry, coins, electrical contacts and components, photography, mirrors, and medical applications like X-rays.
Silver is also often used in industry for its excellent electrical conductivity. Gold tends to be more expensive than silver because of its rarity and ability to hold value over time.
Volatility
Various factors, including global economic conditions, supply and demand dynamics, geopolitical events, and currency fluctuations, can influence the volatility of Gold and Silver.
Historically, Gold has been less volatile than Silver, making it a popular choice for investors seeking a safe haven during economic uncertainty.
Gold has a lower supply, higher demand, and a more established market than Silver.
However, Silver can offer greater price swings than Gold due to its industrial uses, which makes its demand more subject to fluctuations in economic activity. The price of Silver fluctuates based on changes in technology, changes in mining supply, and changes in regulations.
Store Of Value
Individuals and governments have historically used Gold and Silver as a store of value. They are now considered investments.
Investing in precious metals such as Gold and Silver can diversify your portfolio and protect against inflation.
Gold is the more reliable investment due to its scarcity and high demand. The prices of these metals are highly volatile and can be affected by global economic conditions, political events, and even natural disasters.
Storing Gold or Silver securely can be expensive due to the potential cost of insurance, storage fees, and transport.
The main takeaway is that Gold is rarer and more expensive than Silver, making it a better option for investment purposes. In contrast, Silver is more abundant and cheaper, making it better suited for industrial uses. Both precious metals have advantages and disadvantages, so it’s important to understand the characteristics of each before investing or purchasing either one.
Gold and Silver: Advantages & Disadvantages
Which Precious Metal is Better for Investment?
When making a gold or silver investment decision, it is crucial to understand that both have advantages and disadvantages.
Gold is as a long-term safe haven asset due to its store of value and scarcity. Gold is also more liquid than Silver, making it easier to buy and sell on the open market.
Silver has experienced larger price swings in recent years, which can make it a riskier investment than Gold. However, Silver is an industrial metal, and its use cases will increase over the next decade, providing investors with potential upside.
Advantages of Investing in Gold:
- Safe-haven asset: Gold is considered a safe-haven asset during economic uncertainty, and investors often turn to it as a hedge against inflation and economic instability.
- Diversification: Gold can be an effective way to diversify an investment portfolio, as it tends to have a low correlation with other asset classes, such as stocks and bonds.
- Liquidity: Gold is highly liquid, and it can be bought and sold easily through a range of channels, including physical bullion, ETFs, and futures contracts.
- Stability: Gold prices tend to be less volatile than other commodities, making it a more stable investment option.
Disadvantages of Investing in Gold:
- No yield: Gold does not provide any yield, meaning it does not generate any income for investors.
- Limited industrial uses: Unlike silver and other metals, gold has limited industrial uses, which can limit its long-term price growth potential.
Advantages of Investing in Silver:
- Industrial demand: Silver has a range of industrial uses, including electronics, solar panels, and medical equipment, which can drive demand and support its price growth potential.
- Lower price point: Silver has a lower price point than gold, making it more accessible to individual investors with smaller budgets.
- Diversification: Silver can effectively diversify an investment portfolio, as it has a moderately weak positive correlation with other asset classes like stocks, bonds, and commodities.
Disadvantages of Investing in Silver:
- Volatility: Silver can be more volatile than gold, increasing the risk for investors.
- Limited safe-haven appeal: While silver is often considered a safe-haven asset, it is not as widely recognized as gold.
- Limited liquidity: Silver is still a liquid asset, but it may not be as easily traded as gold, particularly for larger transactions.
Investing in Gold or Silver will depend on individual investment goals, risk tolerance, and overall portfolio strategy. Many investors like the diversification offered by these metals.
Conclusion
Gold and Silver are two highly sought-after precious metals with many uses.
Gold is rarer, more expensive, and more durable and corrosion-resistant than Silver.
Silver has excellent electrical conductivity and thermal properties, making it suitable for industrial applications, while Gold’s uses include jewelry and electronics.
Gold and Silver are valuable metals, but their different characteristics mean they command different prices. Knowing your investment objectives and the differences between the two is essential for any investor or buyer purchasing either metal.
FAQ – Frequently Asked Questions
Where can I find Gold Prices?
Gold prices are on websites and financial news outlets like Kitco or BullionVault. Prices for Gold are typically quoted in US Dollars, although other major currencies are also available.
Where can I find Silver Prices?
Prices of Silver are on websites and financial news outlets such as Kitco or BullionVault. Prices for Silver are in US Dollars.
What is the current spot price of Gold?
The metal’s price per ounce in $USD as of March 29, 2023 is $1959.90
What is the current spot price of Silver?
Silver’s price per ounce in $USD as of March 29, 2023 is $23.38
What is a Silver IRA?
A Silver IRA is a retirement account where Silver is invested instead of stocks, bonds, and other traditional investments.
Unlike those more conventional investments, however, the value of Silver is not tied to any stock or bond market and is instead backed by precious physical metals. This makes gold and silver-backed IRAs attractive to those interested in protecting their retirement savings from market volatility.
Investors can add Silver to an IRA account through bars, coins, and rounds with a minimum fineness of .999 pure Silver. These investments are stored in an IRS-approved vault or depository on behalf of the account holder.
Are both Gold and Silver the only precious metals?
Gold and silver are the two most popular precious metals, but they are not the only ones. Other precious metals include Palladium, Platinum, and Rhodium. These metals have proven to be valuable investments due to their rarity and usefulness in industrial applications.
However, these metals are less accessible than gold or silver due to limited availability, higher costs, and more volatile prices. As such, they may be better suited as specialized investments rather than diversification options for a portfolio.
What strategies can investors use to invest in Gold and Silver?
Investors looking to benefit from the potential of gold, silver, and other precious metals have a variety of strategies available to them.
These precious metals investments include:
- Physical gold and silver: Purchasing physical bullion or coins is the traditional way to invest in gold and silver. This approach carries liquidity and storage risk, requiring investors to find a secure location for their metals.
- Exchange-traded funds (ETFs): ETFs are a type of fund that tracks the performance of physical bullion or coins of a certain asset, such as gold. ETFs offer the convenience of stock market trading without the storage risk associated with physical metals.
- Futures and options contracts: Investors can trade gold or silver in futures and options markets. This approach is more complicated than other forms of investment, but it offers greater flexibility t is the
- Mining stocks: Certain companies specialize in the mining of gold, silver, and other precious or base metals. Investing in these companies can provide exposure to metal prices without needing storage.
These sector investments tend to be cyclical so a long-term approach is best for many investors. Other major asset classes like equities, bonds, art, and collectibles should also be part of a balanced portfolio approach. Always consider having more than 1 investment asset.
Speak to a financial advisor before making any investment commitment.
What is the difference between Spot Price and Market Value?
The spot price of a metal is the current market price, while its market value considers additional factors such as purity, form, and quantity.
For example, a one-ounce gold coin may have a spot price of $1800 per ounce but a market value of $1850 due to market premiums. Thus, the spot price represents the base cost of the metal, while the market value considers additional costs that factor into its total worth.
What is securities investor protection corporation?
The Securities Investor Protection Corporation (SIPC) is a non-profit organization that protects investors if their brokerage firm fails or becomes insolvent. The SIPC does not guarantee the performance of investments, but it provides up to $500,000 per customer—including up to $250,000 for cash claims—in case of customer losses due to a broker’s failure. This protection applies only to customers with cash and securities held in their accounts at the failing firm and does not cover losses related to fraud or market volatility.
