Gold and silver prices can fluctuate on a yearly basis, but one thing has remained true ever since tracking of their values began: gold has always been and will always be considered more valuable than silver.
Why is this? There is likely quite a bit of historical context that goes into the values of gold versus silver, but there are other more modern and practical factors that make gold more valuable as well. Here’s just a brief overview of some of these factors.
Both gold and silver are highly liquid assets, because they are viewed by people in all markets as valuable commodities and can, in some circumstances, be used as actual currencies. You can hop in the internet and purchase physical gold and silver any time you want, or visit a precious metal retailer and get your hands on gold or silver bullion. It’s just as easy to sell at online retailers, jewelry shops, pawn shops and coin shops. Gold is just slightly more liquid than silver because it has higher demand and supply than silver, which gives it an edge in liquidity that boosts its value.
Storage and transportation
With regard to storage and transportation, gold is much more cost-effective to ship, as you’re able to fit significantly more dollars’ worth of gold than silver into a single shipping package or safe. This is because gold is worth much more per ounce than silver, and is also much denser. A kilogram of gold, therefore, is smaller and more compact than a kilogram of silver, so you get much more bang for your buck when sending out high-value shipments of the precious metal.
There is a big difference between the retail markups you’ll find for physical gold versus physical silver. For investors, it’s ideal to purchase the precious metal as close to the spot price as possible; otherwise, you’re left hoping the metal’s value will significantly increase for you to break even.
Most companies make their money on buying and selling margins, meaning there’s going to be at least a little bit of a markup for the bullion they sell. This is just part of the nature of gold and silver investing, and shouldn’t be a problem as long as you avoid companies that have unreasonably high markups.
The way most markups work with silver and gold, what you’re better off purchasing depends on how much of it you plan on purchasing. The general rule is if you’re going to spend $1,500 or less on precious metals, you’re going to lose less on markups by purchasing silver, but if you’re going to spend $1,500 or more, you’ll be better off purchasing gold. This only takes into account the current markup rates, and not your own feelings on the future outlooks of both metals, but it’s certainly something you’re going to want to consider.
For more information about what goes into determining the values of gold and silver, or to get started with silver or gold investing, we encourage you to contact the team at Gold Wealth Financial.
- by Steve Hunt