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Silver and gold have dominated the precious metals market and are highly rated due to their profitability. Many people think gold is better than silver (and is a better investment option) since gold sells at a significantly higher price.
However, silver is better than gold in several ways. Silver is better than gold in the following ways:
- Silver has real-life industrial applications.
- Silver is undervalued.
- Silver trades at a lower price than gold.
- Silver is less susceptible to domestic price manipulation.
- Silver is more volatile than gold.
This article will explain why silver is better than gold despite having a lower comparative value. I’ll also discuss why you’ll be better served by choosing silver over gold as your preferred investment.
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1. Silver Has Real-Life Industrial Applications
In his review of investor attitudes on silver and gold investments over the last decade, Dr. Prahlad Chowdri argues that while gold is valued and priced significantly higher than silver, the latter has several real-life applications, giving it an edge over gold.
Accordingly, Dr. Chowdri explains that silver has numerous industrial applications, including solar panels, normal lead-acid batteries, electric conductors, mobile handsets, computers, and eclectic conductors, to name a few.
This adds to its value as a precious metal. The above study also shows that no other precious metal has been able to replace silver in these industrial applications, making it virtually indispensable in these industries.
Therefore, on this front, it's evident that silver is a more useful precious metal than gold. Besides the aforementioned industrial uses, silver also has life-saving medical applications.
It's uses within the medical field include the following:
- Silver is added to bandages for its antimicrobial properties.
- Silver is applied as an antibiotic coating on select medical devices.
- Silver is used in wound dressings and creams.
While gold also has medical and industrial applications, Fernando's research explains that gold's industrial application is minimal relative to silver, and its main applications lie in jewelry and investment.
Accordingly, when you consider the relative applications of gold and silver, silver has broader and more varied industrial and medical applications than gold, making it the more useful option.
It also suggests that silver is undervalued, as the following reason explains.
2. Silver is Undervalued
As discussed earlier, no other precious metal has threatened to replace silver's industrial applications. Furthermore, silver is one of the cheapest precious metals in the commodities market today.
Researchers such as Novotny and Polach suggest that silver is grossly undervalued compared to gold. The researchers explain that certain industries—such as electronic ones—rely on silver.
In other cases, existing substitutes would be too expensive, making silver more indispensable when compared to gold.
Accordingly, the researchers explain that the limited threat of substitutes, coupled with the expected growth in the industrial usage of silver, means that its value will grow at a higher rate relative to gold.
Additionally, silver seems to be largely neglected despite its vast industrial applications. This suggests that there’s more value in investing in silver than gold.
The financial experts at Core Consultants Group also support this premise, explaining that silver enjoys much less demand when compared to gold.
Because silver is in low demand, investors haven’t yet hoarded it as they have gold.
3. Silver Trades at a Lower Price Than Gold
While it’s indubitable that gold has a higher value, this comparative value has different implications when viewed from an investment viewpoint.
One of the key observations from Dr. Chowdri's research is that gold has always traded at outrageous prices, primarily due to the almost laughable imbalance between its demand and supply.
Accordingly, it’s not easily accessible to most people. Silver, in comparison, isn’t only more easily accessible but is also cheaper.
To put this in perspective, an ounce of gold traded at approximately $1,400 per ounce, a price tag that’s out of range for most ordinary Americans.
In comparison, an ounce of silver only traded at roughly $25, based on 2020 statistics. For this reason, silver is often referred to as a poor man's gold.
While silver won’t feature excessive pricing as gold, it’s still a wise investment decision, easily accessible to the layman.
In support of the above, researchers Vign et al. explain that this comparative ease of access and the lower price could explain the introduction of silver ETFs in early 2006, reflecting the market's preference for more affordable precious metals in which to invest.
Accordingly, silver gets an edge over gold because it’s traded at a more economical price and is easily accessible by traders from most socioeconomic brackets.
4. Silver is Less Susceptible to Domestic Price Manipulation
One of the shortcomings of gold is that the Federal Reserve System and/or the United States federal government can control its price. Why?
It’s because the United States boasts the biggest stockpile of gold reserves in the entire world at 8,100 tons (7.35 million kg).
In contrast, the United States only controls roughly 3.6% of worldwide silver production. Accordingly, unlike gold, whose value is subject to domestic price suppression and manipulation, global market forces ultimately determine silver's value and price.
Financial experts at Sunshine Profits supported the above. They explained there's no evidence in the current literature of silver price suppression. The same cannot be said about gold.
5. Silver is More Volatile Than Gold
There’s a consensus in current literature that silver is more volatile than gold. Researchers Kayal and Maheswaran explain that silver's price is notoriously volatile.
That's mainly due to large and sudden fluctuations in its demands. These fluctuations are primarily due to the fact that it's both a financial investment commodity and a precious metal with vast industrial applications.
Because of this volatility, the price of silver is subject to wild swings, making it an attractive investment option for bold investors looking to bank on these short-term fluctuations.
Should You Invest in Silver?
Now that I've outlined the reasons why silver is better than gold, the real question still stands, should you invest in silver?
To answer this question, it depends on your investing strategy and how long you are willing to wait for the price of silver to increase over time.
I think it is one of the safer investments that an individual can make if they wanted to hold a little bit of silver in their investment or retirement portfolio.
Make sure you check out American Hartford Gold, as they can help answer your questions when it comes to investing.
American Hartford Gold
American Hartford Gold helps individuals and families invest in precious metals. Because of their thorough process and well-versed staff, American Hartford Gold is a great choice if you're new to investing in gold and metals.