Gold Vs Silver: Which Is Better for Investment?

Investment is the best way to increase the value of someone’s assets and their worth over time. Many conventional investment avenues, such as fixed deposits, mutual funds, stock market investments, etc., have helped people to gain higher interest. But, according to the latest trends, investing in metals has provided better returns. And when we say metals, we are talking about gold investments and silver investments. 

Both gold and silver investments yield handsome returns, and there has been a steady increase in their return rates. While gold is an expensive metal that is highly coveted, silver is widely used in various industries. Both investment options have their pros and cons, making it even more difficult to choose the ideal investment metal. 

Things to Keep in Mind while Investing in Metals

Here are some tips that you can consider while choosing between the two metals:

1. DemandEvery metal investor must take into account this very crucial factor. The demand for the metal decides its worth and its potential interest rate. In the case of gold investment, it is a highly precious metal used more in creating jewellery. On the other hand, silver is widely used in industries like electronics, medicine, and thermal.
2. LiquidityLiquidity in investment means how easy it is for you to trade these metals. For example, gold has higher liquidity, about 6 times more than silver. 
3. AffordabilityGold is more expensive, which makes silver more affordable. But since gold is more expensive than silver, gold has more reserve value and is also promoted more. 
4. Market VolatilityMany investors worry about market volatility, so they are unsure about gold investment or silver investment. If the market is more volatile, it is more prone to inconsistency. Silver, as a metal, is more volatile than gold, as it has higher demand. So, as the economic cycle changes, the demand for silver fluctuates. So, investing in it might become a bit risky. 
5. StorageStorage requirements of the metal also decide if the investment is worth it or not. If the metal takes up huge storage space then investing in it is not a good idea. Also, if the metal needs to be stored in a special condition to prevent oxidation then also the metal is not a decent investment option.

Which is Better: Gold Investment and Silver Investment? 

There is no definite answer to this question as both of them have their own pros and cons. Let us compare silver and gold investments based on some parameters.

• Rate of ReturnSilver investment has a higher return rate than gold investment. In 2010, the return rate of silver was about 80-85%, whereas that of gold was about 20-25%.
• TradingWhen talking about the liquidity of the asset, gold has a market size of about ₹24.5 trillion, which makes it way more easily tradable than silver, whose market size is about ₹4.4 trillion. So, from a trading perspective, gold investment is a better option than silver investment. 
• PricingGold is a highly sought-after metal, which makes it highly expensive in the Indian market. Due to the high imbalance in the demand and supply of gold, gold prices are higher than those of silver. Silver, on the other hand, has a higher demand and also caters to a large customer size. So, the price of silver is lower than that of gold, making it a better investment option than the latter. 
• Storage FacilitiesSilver has more density, so gold takes lesser storage space than silver. Also, gold does not require special storage conditions. But silver requires a specialised storing facility as it gets easily oxidised when it comes in contact with air. Also, banks provide storage facilities for gold but not for silver. So, from the storage point of view, gold has an edge over silver.
• Risk FactorBecause of the differences in their values, the risk involved in gold investment is higher than in silver investment. Silver is a low-valued asset, which makes it a risk-free investment metal. Gold is a very highly valued asset, which adds extra risk for its investors. 
• Market Rate FluctuationsAccording to market trends, silver has been more volatile than gold because of its changing demand as an industrial material. On the contrary, gold is less volatile, as its price stays stable most of the time. So, gold investment is a better option from the perspective of market volatility. 

Conclusion

Both silver investment and gold investment have their pros and cons. Which of the two you choose depends on your risk appetite. While silver has low risks and higher returns, gold has higher liquidity and less volatility. So, you should weigh all these factors before investing in either of these metals. Instead of buying these metals in the form of jewellery, bars, and coins, you can also invest in them in the form of sovereign gold bonds, silver and gold ETFs, etc. 

If you have come this far, it means you like reading about different investment schemes and policies. If that is the case, you should visit Piramal Finance to read more about ETF investments, mutual funds, stock market and trading, etc. Piramal Finance can also help you manage your finances with its financial products and services.