Should You Buy Gold or Silver?

The Spotlight

10 minutes read

Jan 25, 2024

PAMP Suisse 1 kilo fine silver bar and PAMP Suisse 50 g gold bar on a blue background

Choosing between gold and silver: A comparison to help you decide which metal might be right for you.

If you're into precious metals, you've probably pondered the age-old question: gold or silver?

Now, you might already know they’re both useful for diversifying your portfolio, but the real fun begins when we dig into the nitty-gritty of their differences and similarities.

So, let’s dive right in and figure out which precious metal might suit you better. 🌟

A quick overview of the similarities and differences between gold and silver.
A quick overview of the similarities and differences between gold and silver.

Silver is more affordable than gold

The first obvious difference between gold and silver is the price. You would’ve likely noticed that silver is more affordable compared to gold.

But why is that the case? 🤔

Well, according to the World Gold Council, the value of gold and silver is mainly influenced by their supply. Nearly 1.74 million metric tons of silver have been mined throughout history, compared to around 198,000 metric tons of gold.

Now that we know why silver is more affordable than gold, let’s find out about the gold-to-silver ratio.

Some investors use this ratio to influence their buying decisions.

It tells you how many ounces of silver it takes to buy one ounce of gold, which can be a valuable tool.

For example, as of November 14, 2023, the gold price stands at £1,579.96 per ounce, while the silver price is £18.31. This gives us a silver-to-gold ratio of approximately 86:1 (£18.31 divided by £1,579.96).

But, why bother using this ratio?

Well, using the example above, you might decide when to buy or sell your silver. For instance, a high ratio might indicate a good time to consider adding silver to your portfolio, as it could be relatively more affordable.

And vice versa, if the ratio is low, it might be a good time to sell off your silver.

So, if you’re new to silver investing, you might want to make use of this nifty tool. And because silver is more affordable than gold, it might be a good starting point to start your investment journey in precious metals.

But before you grab your wallet, let’s also take notice of silver’s volatility. 📈

💡 Learn more about how to use the the gold-to-silver ratio.

Silver is more volatile than gold

a stock market investment graph

Silver, compared to its more composed gold sibling, is known for its price swings, potentially making it an unpredictable venture for investors.

The reason behind this volatility is interesting and many-fold.

For a starter, silver’s volatility lies in its market size relative to gold. Gold brings over 80 times more value per ounce than silver (as of 14 November 2023).

Even though silver is mined in larger quantities, its market is just a fraction of the gold market.

This difference in market size means silver is more susceptible to fluctuating prices.

According to analysts at Morgan Stanley, “the volatility in silver prices can be two to three times greater than that of gold on a given day.

For example, on a gloomy market day, silver’s price can plummet more than gold, but equally, on a good day, it can increase dramatically.

Now, in contrast, gold’s larger market size means there are fewer price swings. Gold’s historical stability stems from its role as a store of value, a hedge against inflation, and a safe-haven asset.

So, while gold moves gracefully through geopolitical and economic downturns, silver, with its industrial links, becomes more volatile and responds to the shifts in supply and demand.

What does this mean for you?

With its smaller market size and industrial exposure, silver can be the more volatile option. This means that while there can be larger short-term gains, it can be at the cost of increased downside risk.

In comparison, for those interested in long-term stability and a hedge against economic downturns, gold can be a good choice as it’s less volatile in the long run.

💡 Learn more about the gold vs. silver volatility.

Silver’s use in the industrial sector

Process of laser manufacturing high-precision components

As outlined in the World Silver Survey 2023, silver plays a crucial role in diverse sectors, including photography, jewelry, and automotive industries.

And according to Morgan Stanley, “together, these categories represent more than 95% of annual silver consumption.”

The global demand for silver from 2013 to 2022 in different sectors, including industrial, investment, photography, jewelry, silverware, and de-hedging.
The global demand for silver from 2013 to 2022 in different sectors, including industrial, investment, photography, jewelry, silverware, and de-hedging.

In essence, the dependence on a few major sectors makes the silver market more sensitive to changes in those sectors. Economic shifts, technological advancements, or changes in consumer behavior within these industries can have a noticeable effect on the demand and, consequently, the price of silver.

💡 The uses of silver in industries

Since silver is a great conductor of electricity, it makes an important component in the products of electronic devices like smartphones and computers. But it’s also used in solar panels and electric vehicles. 

What does this mean for silver investors?

It means that when these major sectors prosper, silver is a hot commodity because industries need it for various products. But when things slow down, silver demand takes a hit.

The supply and demand of gold within different sectors, like jewelry, technology, and investment.
The supply and demand of gold within different sectors, like jewelry, technology, and investment.

So, this means gold isn't as susceptible to shifts in these economic dynamics as silver.

Storage for gold and silver

While storage might not seem like a big deal, it’s good to be aware of the fact that silver has a much lower density than its sibling, gold.

To paint a clearer picture, let’s compare the size of a 1 kg gold bar and a 1 kg silver bar:

1 kg gold bar with a ruler
1 kg fine gold bar from PAMP, available on GOLD AVENUE
1 kg silver bar with a ruler
1 kg fine silver bar from PAMP, available on GOLD AVENUE

When you look at these two bars, they're pretty close in length and width. But here's the thing: the silver one is almost double the thickness of the gold one!

So, if you're thinking about stashing silver instead of gold, you'll need a safe that's about twice as tall, making the whole storage thing a bit tricky.

The same deal goes for bank deposit boxes – if you're into silver, you might end up spending more for a bigger box, and those aren't cheap, to begin with.

But here's a trick: if you buy with us, you can enjoy our free storage solution. It allows you to store your gold or silver with us for free (up to €10,000/£8,500) in our secure vaults in Switzerland. They’re also independent of the banking system.

To make it even simpler, you have the option to resell your precious metals at any time, with 24/7 access. We don’t charge any fees or commission, either.😲

Taxation of gold and silver

One of the other differences between gold and silver lies in their taxation.

While in the UK, investing in gold bullion is VAT-free, silver gets hit with a 20% VAT rate.

This means that if you want to invest in silver, you’d need the silver price to climb at least 20% just to break even on your initial investment and turn a profit when it’s time to sell.

But another nifty tip is that we offer VAT-free silver - yep, you read that right.

Our shop is 100% VAT-FREE!

You can enjoy cheaper prices on silver, platinum, and palladium when storing them for FREE in our fully insured vaults in Switzerland.

You can sell your products back to us for free at any time, or get them delivered to your house whenever you wish. All in a few clicks.

Learn more about taxes on gold.

Similarities between gold and silver

Although gold and silver bear differences in price, storage, taxation, volatility, and industry use, they also have some commonalities between them.

When we talk about silver and gold, we're talking about physical assets you can touch and feel, unlike bitcoin, ETFs, or stocks. Silver and gold have been around for centuries and historically have been used as reliable store of value.

And get this: with silver and gold, you’re in control, meaning there are no third parties involved. You have full access to your savings, giving you greater freedom and control.

Now, another similarity is scarcity. Unlike our everyday cash, silver, and gold have a cap on how much is out there. As the World Gold Council puts it, if we were to place every ounce of the above-ground gold stock next to each other, “the resulting cube of pure gold would only measure around 22 meters on each side.” This rarity makes gold quite appealing among investors.

Also, bringing new gold and silver takes a great deal of effort and resources.

This scarcity and greater production effort means they’re less likely to lose their value over time. 🌟

Should I buy gold or silver?

gold and silver bar piles on a light green background

As we’re reaching the end, you might ask: “Which is better, silver or gold?”

Well, there isn't a one-size-fits-all answer. It really depends on your personal circumstances and preferences.

As we saw, silver is more affordable than gold, which might be suitable for beginner investors with a limited budget.

But it’s also worth noting that silver experiences higher volatility, which isn’t always a negative, depending on how you view it. For short-term investments, silver can be an interesting choice. If timed correctly, investors can reap the benefits, but the opposite can also happen if silver prices fall.

Storage also matters because silver takes up more space due to its thickness. This might add up costs for you in terms of storage. But when buying with GOLD AVENUE, you can store your precious metals for free.

When it comes to taxation, gold is free from VAT, whereas silver faces a 20% VAT in the United Kingdom. This VAT can be avoided if you buy our range of VAT-free silver products and choose to store them in our secure vaults in Switzerland.

Both gold and silver can be used as a way to diversify your investment strategy and have historically been used as a reliable store of value. And because of their limited availability, unlike paper money, it means they’re less likely to lose their value over time.

So, there you have it - a comparison between gold and silver, which has hopefully given you enough information to make the leap and start your gold or silver savings.


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