Gold vs. Silver: Key Differences to Know Before You Invest

Gold and silver have captivated human beings for thousands of years, prized for their lustrous beauty and rarity. These precious metals have played a significant role in human history, serving as currency, status symbols, and even religious icons. 

Although they share many similarities, gold and silver also have distinct differences that make them unique. From their physical properties to their cultural significance, understanding the differences between gold and silver can provide valuable insights into the world of precious metals.

In this article, we will explore the key differences between gold and silver and delve into their respective histories, properties, and uses. Whether you are a collector, investor, or simply curious about these fascinating metals, read on to find out more.

What is the difference between gold and silver?

Gold is extraterrestrial. Instead of coming from the earth's surface, it resulted from nuclear fusion in space. We only have gold on our planet because of stellar explosions.

In fact, according to the USGS, all of the gold we've mined throughout human history would fit in a cube that is 23 meters wide on every side.

But the best part is: gold lasts forever!

Gold was first used by cultures in modern-day Eastern Europe in 4000 BC to make decorative objects and nowadays is used in communications equipment, spacecraft, jet aircraft engines, and jewelry.

Silver, however, helps to prevent infections and promotes healing. It is effectively used in medicine due to its antibacterial properties to kill microorganisms without harming humans or animals.

It is also the best conductor of electricity of all metals, resistant to corrosion, moldable, and malleable, and it is the second most used commodity on earth. Its main use has the highest electrical and thermal conductivity of all metals.

According to The Silver Institute and Statista, the world silver supply in 2022 was nearly 1.03 billion ounces.

Silver was discovered in Prehistory after the discovery of gold and copper (around 3000 BC). and the oldest silver objects dating back to 5000 BC come from India. It is found in tombs of Egypt, China, and Mesopotamia.

The use of silver and its compounds in medicine and water purification is due to the antibacterial and antifungal activity of Ag+ ions. Silver nanoparticles are already being used in burn patients to prevent and treat infections.And nearly every computer or mobile contains silver. 

Gold is the most malleable and ductile of all metals. Silver is the second.

Both rare earth metals can be used to prepare for future uncertainties and prospective economic changes. Understanding their technical characteristics and how they are affected by economic sensitivities can help you decide which one of them will benefit your portfolio the most.

Gold vs. Silver: Understanding the Pros and Cons

Even for someone instinctively aware of rare metals' historical value, you need to consider the unique difficulties and perks that each one of them can bring beyond investment purposes.

Sector investments tend to be more volatile than other types of investments due to their narrow focus (they will always be risky). But investing in precious hard assets like gold tend to be able to provide a hedge against economic or market downturn. Therefore, monetary or political developments might affect their financial performance, but they will never be worth nothing.

Certainly, precious assets might impose additional costs on the investor since the expense to keep it safe can be high and unsuitable for some people.

Pros of investing in gold

Unlike silver, gold will always be worth more than other major asset classes as one of the best options for insurance against inflation and economic declines. Its historical use and role in the technology industry ensure its enduring value.

A popular expression says, "invest in silver if you hope for good times, and invest in gold for the bad times"

And because gold has very low correlations to other assets, it diversifies your investment portfolio. It tends to perform well in times of crisis. While all currencies fall, the price of gold tends to go higher, considering that people turn to gold in times of crisis instead of other forms of investments.

Gold vs Fiat Currencies

If you decide on the physical asset, you will have the benefits such as holding something tangible, being protected against hacking, you can use it as money if needed, and cannot be depreciated like paper currency.

Cons of investing in gold

You might have heard that gold is considered a "safe haven," and that is not a lie, but unfortunately, there's always some risk to any type of investment.

Gold can be hard to store at home since theft is always possible. And you would have to invest some good money to buy it. Nonetheless, gold doesn't pay any yield, unlike stocks. So you could have a negative yield if you ever have an emergency and have to sell it in a declining trade.

Pros of investing in silver

Silver is much cheaper than gold since there's more supply of it on the crust of the Earth. It is related to the global industry due to its use in electronic production, medical and technological applications.

Understand why silver is cheaper in our article.

Even in the worst economic case scenario, silver is likely to resist due to its intrinsic and historical value.

Silver can be considered a good portfolio diversifier with a moderately weak positive correlation to other investment forms.

Cons of investing in silver

Silver tends to be more volatile than gold, which could represent a challenge when managing portfolio risk.

Silver is prone to tarnish when in contact with sulfur-containing gasses. It can be polished, though.

Why invest in gold and silver?

Whether you should invest in gold and silver depends on your personal purposes.

Silver tends to be more volatile and more affordable. So you might get a good deal if the price of silver goes up.

However, if you desire a more secure investment, it may be worthwhile to consider investing in gold, which is a renowned hedge against inflation.

Consider investing in both to build a more diverse portfolio.

Needless to say, if you intend to keep your precious metals at home or at an allowed facility, you'll have to consider the insurance costs. There are different insurances for gold and silver stored at home that you can hire, and there are also authorized depositories or vaults that will be responsible for taking care of your precious metals investments.

Gold and silver are generally not seen as risky investments, but they do carry some risks.

They are often considered safe-haven assets, particularly during times of economic and political instability, and are viewed as hedges against inflation.

Exeter's modern Pyramid

However, as with any investment, the prices of gold and silver can be volatile and subject to fluctuations based on a variety of factors.

Additionally, physical gold and silver investments can come with storage and transportation costs and the risk of counterfeiting or fraud.

Overall, gold and silver can be considered relatively safe investments, but investors should be aware of the risks and make informed decisions based on their individual investment goals and risk tolerance.

Gold vs. silver: Volatility

Regarding volatility, silver prices tend to fluctuate more. Which can benefit an attentive dealer.

Gold suffers less with long-term price volatility. It is less susceptible to economic declines since, unlike other industrial base metals, its industrial use is actually very limited.

Gold vs. silver: Inflation hedge

Gold is universally acceptable and easily authenticated. The price of gold tends to rise when the prices of other assets fall. Therefore, when times are bad, gold will likely perform well because everyone turns to gold in times of crisis. So, as demand increases, the prices go up.

Silver is money. Period. Even though it goes under the radar of the crisis (since everyone else will be trying to acquire gold), it can also be an answer.

Gold vs. silver: Long-term returns

Silver is connected to the global economy. Half of all silver supply is used in heavy industry and high technology. If sold during a decline in the market, your profit could be less than the original investment.

And gold, based on past performance, is more stable and frequently used to hedge against inflation in the long run. Its use in the industrial field is fairly limited, but it's one of the first forms of protection when people feel they need financial coverage.

How much gold and silver should I have in my portfolio?

It depends on your own investment needs.

If you are looking for something to rely on in times of crisis, gold might be an option since it tends to perform well in times of crisis or rising inflation. Due to manufacturing and distribution markups, investors frequently pay a premium over the metal spot price of gold and silver. Both can be a hedge in a potential economic crisis or sustained periods of rising inflation.

Nonetheless, precious metal investments may not be suitable if you are looking for current income, which is the cash flow generated in the immediate or short-term period.

Hard assets like silver, gold, and other precious metals like platinum, palladium, etc., must be stored and will bring costs to keep them safe.

How to invest in gold and silver?

It will depend on your investment objectives.

  • Precious metal ETFs (exchange-traded funds) are more diverse than individual stocks. Instead of buying many individual stocks, buying an ETF would allow the investor to gain exposure to various stocks and spare the owner from storing the precious assets. The fund's operator will manage the customer's assets, like a physical supply of precious metals. It does not give the investors access to the underlying metals, though. They will protect the customer's cash, other commodities not included. An ETF's expense ratio, the annual operating expense, will be charged. You can buy shares and keep them in a traditional brokerage account.
  • A mutual fund is a company that pools investors' money to make multiple types of investments, and you must know that as the portfolio. Stocks, bonds, and money market funds are examples of the types of investments that may make up a mutual fund. Some mutual funds have both gold and silver as part of their stocks.
  • Bullion is for those who are preparing for the worst. Investing in taking physical delivery and storing it yourself is also possible. That could be less expensive, but it would mean being responsible for protecting your investments.

Read more about hiding your bullion at home here.

  • Many investors also invest in IRA Gold. You can hold physical metals in an authorized facility with a manager who will purchase the rare materials for you and be responsible for maintaining the customer's assets at a third-party depository.

It is also possible to turn your 401k into a Gold IRA. Learn more about Gold IRA.

  • Certificates can offer the benefit of owning precious assets without having the problem of storing and protecting them. But they are paper with no intrinsic value, which could be useless in an emergency.
  •  Mining stocks are investments in companies that produce or explore minerals. That’s a complex market divided between two types of investors: majors and juniors. Mining companies go through geopolitical and fluctuating market risks.

The Gold/Silver Ratio

The Gold /Silver Ratio is the amount of silver one can buy to a given amount of gold. This ratio usually measures the two metals in Troy ounces, but it is possible to get the same estimate using other metrics, such as grams, kilos, etc.

You can obtain the ratio by dividing the silver price by the gold price by the current silver price. It will tell how many silver ounces it takes to buy one gold ounce.

Gold/Silver Ratio

As of April, 2023, the gold/silver ratio is around 80. In other words, you would have to purchase 80 Troy ounces of silver to account for 1 Troy ounce of gold.


Should I buy gold or silver in 2023?

Whether you should invest in gold or silver depends on your goals. Gold tends to be a hedge against inflation and performs well in times of crisis. Silver, which is more affordable and volatile than gold, is highly demanded in the technological, electronic, and medical industries. Investing in both might prevent you from losing profit if one of their prices goes down or if you want a more diverse portfolio.

Which is more expensive, gold or silver?

Gold metal has been more expensive than silver since ancient times. Actually, silver was just more expensive than gold once in history. Since gold supplies are rarer than silver and the demand for gold is still higher, gold is more expensive than silver. The gold price can be better understood using the Gold/Silver Ratio - the dynamic moving amount of silver one can theoretically buy with a fixed amount of gold.

Why is silver so much cheaper than gold?

In short, silver supplies are higher than gold supplies. But gold has always been more desirable for its rarity and symbol of status and wealth.

What is the current price of gold and silver?

As of April, 2023, the silver price is fluctuating at $25 per ounce, and gold is fluctuating at $2,000 per ounce. However, you can check the gold and silver spot prices for updated numbers.

How do I know if my gold and silver are real?

The best option to avoid being scammed is to buy it from respected and trusted dealers or experienced, well-rated online businesses such as SD Bullion. Besides that, another way to ensure that your pieces are real is to have them certified or graded.

What are some ways to invest in gold and silver?

The forms to invest in gold or silver can vary from derivatives to physical precious metals. You can invest in Commodities exchange-traded funds (ETFs), Common Stocks and Mutual Funds, the actual bullion, or certificates.

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Mo Menezes
Mo Menezes
Researcher and Contributor

Murilo (Mo) Menezes is an attorney and tenured English professor. His passion for economics and coinage led him to the gold and silver industry where he writes in-depth articles about collectible coins; as well as coin news and investing articles...