Gold, Go Home: 14 Convincing Reasons To Invest in Silver Instead

INVESTING - INVESTING BASICS
Why are seasoned investors bidding farewell to gold and embracing silver?
Updated July 9, 2023
Fact checked
businessman looking at silver coins

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Historically, gold has been seen as a more valuable investment than silver, with 26% of Americans saying gold is the strongest investment currently, up from 15% in 2022. 

But that doesn’t mean silver isn’t without its benefits. While it can be seen as volatile, particularly over a short period, silver is often considered an inflation-proof option for investors looking to boost their bank accounts.

To get to the facts on silver and whether it’s a wise investment in 2023, here are 14 considerations before you add this shiny commodity to your portfolio.

Silver is more affordable than gold

Destina/Adobe silver ingots

Silver is significantly more affordable than gold at $24 per ounce as opposed to $2,000 per ounce, making it appealing to investors looking to enter the precious metals market at a lower price point.

You’ll still get some of the benefits of gold if you’re buying a hard asset that you can hold, but you won’t pay thousands of dollars for a tiny physical amount the way you would with gold.

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Silver can be easier to sell

Jeffrey Daly/Adobe homestake mining company silver bullion bars

Due to its lower cost, silver can be easier to offload quickly in small sums, which is a plus for those needing to free up liquid assets quickly, particularly for everyday spending. 

Given its low price, you may not sell silver for a down payment on a house, but it could be helpful to sell for day-to-day purchases.

Silver makes a wonderful gift

nsc_photography/Adobe silver bullion and coins

Want to start a tradition of gifting an investment to a younger relative? Silver is a great place to begin since it’s more affordable and can easily be given in amounts you can hold in your hand. Look at coins or bullion for a physical investment that can be gifted.

You have options to invest in silver

Remigiusz/Adobe stacked silver bars

While coins, jewelry, or bullion might be the first items that come to mind when you think of silver, there are several options for investing in silver.

There are futures, ETFs that own silver or silver miners, and silver mining stocks. Each of these comes with risks beyond silver’s volatility, so do thorough research on the securities you’re considering.

Silver has a strong industrial demand

Tomasz/Adobe cyan and silver battery on white background

Throughout your day, you probably use multiple items made with silver and don’t even realize it. And we don’t just mean jewelry. Silver is known for its industrial demand, from batteries and solar panels to auto parts.

In fact, 56% of silver’s total supply goes to industrial uses, which means during booming economic times when industrial demand and manufacturing are high, silver prices may get a boost.

Lower premiums on silver

Peter Hermes Furian/Adobe one kilogram cast silver bar

When buying silver bullion, you won’t pay a raw price or what dealers call a spot price. Instead, you’ll pay a premium, which is the price you pay over the spot price. However, on silver, these premiums tend to be lower than gold, creating a lower entry barrier.

Silver has a smaller market share than gold

RHJ/Adobe stones of gold and silver gross

While the total amount of new silver each year is close to one billion ounces — compared to gold which is a mere 120 million ounces — its value is so much less that its market share is dwarfed by gold. 

Gold’s overall market value is 12 times bigger than silver. This smaller value helps lead to its volatility since market swings are felt more significantly.

The use of silver at home is rebounding

volff/Adobe silver cutlery on a dark grey background

Demand for the silver you use on your table is rebounding after it took a dip throughout the pandemic. Silver bowls, silverware, vases, and more are being used again for entertaining, which could help drive silver prices up.

Silver doesn’t follow the stock market

Maksym Yemelyanov/Adobe silver bar ingots and coins

Silver is often seen as a hedge against inflation and the stock market because it tends to follow its own rhythm and, historically, performed well over long periods. 

It can be a smart way to diversify a portfolio because it may be up when stocks are down and can be more liquid than other options.

You can buy junk coins to invest

justinkendra/Adobe pile of silver coins

A coin collector will probably turn down the chance to buy dimes, quarters, and half dollars issued before 1965. They have no collectible value on the coin market. 

However, they do contain large amounts of silver that are valuable. You might want to look at the dates on your coins next time you get change.

Silver investments should be kept to no more than 5%

Destina/Adobe pieces of silver ingots

While silver can diversify a portfolio because it differs from stocks and other investments, it shouldn’t be used to heavily weigh your portfolio toward precious metals. 

It’s a volatile choice, and silver shouldn't make up more than 5% of your portfolio if you're seeking a diversified portfolio.

Silver takes up room

Rashevskyi Media/Adobe stack of silver bars in the bank vault

Because silver’s value is low compared to gold, you’ll need significant storage space to accommodate all the silver needed to amass tens or hundreds of thousands of dollars of value. A safe deposit will hold about $2,300 of silver currently.

Silver’s outlook is shiny

ravital/Adobe ingots and flat silver bars

Silver’s outlook is shiny for 2023, particularly when you look at the gold-silver ratio. That’s determined by how much silver you need to purchase one ounce of gold. 

When the gold-silver ratio exceeds 80, it means that silver is undervalued on a historical basis and could rise. Right now, that ratio is 85. 

Things are looking good for silver, particularly if inflation sticks around.

Silver stockpiles are small

Rashevskyi Media/Adobe silver bars

Silver prices could skyrocket if there were a run on silver thanks to industrial demand or supply chain issues. This is partly because the government no longer stockpiles silver now that it’s not used in coins.

Bottom line

Olivier Le Moal/Adobe silver bullion bars and price chart

If you decide to invest in silver, remember it’s a commodity. It won't pay interest or dividends or create income before selling it. Plus, you’re relying on someone else's demand to buy it when you are ready to sell.

It’s also extraordinarily volatile even if you do find a buyer. In 2011, silver reached nearly $50 per ounce — and it hasn't reached that price since. When building wealth, a diversified investment portfolio is typically the smartest strategy for most investors.

FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.


Author Details

Heather Bien Heather Bien is a writer covering personal finance and budgeting and how those relate to life, travel, entertaining, and more. With bylines that include The Spruce, Apartment Therapy, and mindbodygreen, she's covered everything from tax tips for freelancers to budgeting hacks to how to get the highest ROI out of your home renovations.

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