Wednesday, March 13, 2013

Why I Pick Silver Over Gold

I’ve been paying a lot of attention to silver as an investment lately. It seems to me that it’s an investment option that often gets overshadowed by its big brother, gold. Gold is obviously the more glamorous option of the two, and it -- or its favored cousin, platinum -- often get more attention when people are discussing investing in metals. However, I tend to like silver over either of these two options.

Long-term Appreciation Moving Forward
Sure, on a per/ounce basis, gold is worth more than silver; however, over the last 10 years, silver has beat out gold in appreciation by nearly 5 percent a year. While gold has silver beat in the longer term (going back over 30 years), I think silver has a better shot at appreciating at a greater rate moving forward because it’s not played out yet compared to gold.

Applications
Silver is used and found all around us in our daily lives. From industrial applications in technology, to household items like silverware, mirrors, candlesticks, and more, and of course in personal finance through coins and investments, silver is, has been, and will continue to be used in a vast number of applications. In fact in ancient days, the Greeks and Romans used silver urns and containers to hold water and wine to keep it from going bad. Because of silver’s ability to combat bacteria, it’s also heavily used in medicine and in hospitals.

The more I find out about the hundreds, if not thousands of silver uses, my confidence in it being a good investment (especially for the long term) continues to grow.

Easier Bought, Easier Spent
It’s pretty easy to buy silver, especially in its physical form. Outside of going to garage sales, antique stores, and resale shops, walk in to about any coin shop and there’s bound to be silver of some sort. Whether as bars, ounce coins, collectible coins, or what is referred to as “junk” silver (coins of pre-1964 creation), silver is often abundant and easily purchased due to its lower price compared to gold.

With an ounce of gold currently hovering right around $1,650, and an ounce of silver closer to $31, a regular Joe like me won’t find himself breaking the bank to buy an ounce or two of silver compared to an ounce or two of gold.

And when it comes time to sell silver -- whether at a coin shop or online -- it’s probably a bit easier than selling gold. I don’t know too many people who know what gold coins look like. But if I walk up to someone -- coin dealer or not -- and show him or her a dime or quarter from 1950, they’re likely to recognize it as currency and hopefully know as well that 90 percent of its composition is silver.

Decreased Risk
When I buy silver, I’m not too worried about it being counterfeit. I highly doubt anyone would go to the work to counterfeit an ounce of silver -- or eve a bar of silver for that matter. The profit and risk versus reward just really isn’t there. With gold however, and the substantial price differential from silver, it might be more worth their while.

Therefore, when I buy a roll of junk silver, my concerns are placated as compared to what they might be buying a gold coin with which I’m not familiar and could be a fake.





Sources:
http://www.goldprice.org/

http://goldprice.org/charts/history/silver-price-performance.png

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