Precious metals are a vital part of any investor’s portfolio. Each time a financial crisis hits, you can count on this segment of your portfolio to act as a safety net. If you are new to the game, you may be wondering whether gold or silver is a better investment for you. While the right answer will depend on numerous factors, such as how much capital you have, we share with you some considerations to take into account in this article.

Good Reasons to Invest in Precious Metals

There are many good reasons to add precious metals to your portfolio, including:

• It’s an investment that comes with no credit risk.
• It provides you with a degree of stability during times of economic instability and inflation.
• It’s a good way to diversify your portfolio as precious metals react differently to economic conditions than stocks and bonds.
• You can leverage on the volatility of precious metals to build up wealth.

Volatility

Historically, silver has been more volatile than gold. As most of the demand for silver comes from industries, this means that demand is constantly rising and falling based on market operations. Although this does mean that silver can be a good profit-generating commodity, it also makes it a riskier asset. This is compared to gold, which has remained remarkably stable over time.

Liquidity

Before venturing into any investment, you will need to consider liquidity. That is, how quickly and easily you can cash out your gold or silver in the event that you need to. Gold has a much larger liquid market than silver, and its value is not tied as closely to the laws of supply and demand as it is with silver.

Because silver has a stronger relationship to industrial and economic activity, you already know that it is much more volatile. This means that silver becomes a much more attractive option during down cycles when its price goes down, but the reverse is true as well.

Price

Naturally, silver is more affordable than gold, which can be a pull factor for investors with a lower level of capital. This makes it the more accessible option. However, investors generally deem gold as the better investment option due to its lower volatility and higher liquidity.

Storage

Another thing you have to consider before purchasing gold or silver is where and how you are going to store them. For instance, $100,000 worth of silver will require a lot more storage space than $100,000 worth of gold because of the difference in price and density. In addition, silver is more prone to tarnishing than gold, which means you will have to give greater thought to its storage environment.

Whether you intend to store your precious metals at home or in a vault, you will have to consider the cost and the environmental conditions. The annual fees for vault storage can quickly start to add up, and you may not have the right conditions for storage at home.