Gold and Silver (IRA) Investment: What Are the Differences?

by Josh Biggs in Finance on 7th December 2021

The bond and stock markets volatility in recent times has made several investors return to an ancient form of investment commodities. Precious metals such as silver and gold have been in existence for centuries. They have been commodities to display affluence. Beyond that, investors are opting for these items since they can serve as an inflation hedge. 

These commodities are wonderful investments in the sense that during economic downturns, they seem to retain and even increase in value. Although there are different precious metals that one can invest in, Aurum and Argentum remain the most profitable of the lot. 

With these two heavyweights slugging it out, the question “is gold or silver a better investment?” always comes to the mind of any investor planning to invest in precious metals. Therefore, to answer this question, we will look at the differences between silver versus gold investment.

Let us get started…

1. Price & Affordability

It is impossible to consider an investment in these assets without thinking of their respective prices and how affordable they are. As far as price and the affordability of these items go, the following are some differences that must be considered:

i. Price Ratio of Aurum to Argentum

An ounce of gold is priced at $1,860, whereas silver is just $25 per ounce; the difference is quite glaring. This is how it has been for centuries since the supply for gold is lesser, hence its demand is higher. 

The Aurum to Argentum price ratio is bound to fluctuate. Hence, there are times when the golden metal becomes more available compared to the silver metal and vice versa. Hence, wise investors usually monitor the trends and make their investment during periods when either commodity is affordable. 

When we talk about which item is more affordable, we are referring to the ratio since Aurum will always be more expensive than silver. The Aurum to Argentum price ratio fluctuation is always around 40:1 to 60:1

Hence, whenever, the ratio is less than the above range, the conclusion is that the golden metal is undervalued whereas Argentum is overvalued. In the same vein, when the ratio is higher than the above range, it indicates that Argentum is undervalued, and Aurum is overvalued. 

ii. Lesser Large Coins or Extra Small Coins?

If you choose coin investment, then this section is important for you. Silver allows investors who do not have so much cash to readily invest in these assets without the substantial outlay necessary for Aurum investment. 

The amount of a 20-coin roll of 1-ounce silver counts has fewer fraction costs when compared to that of a 1 1-ounce gold coin. Therefore, if you want to invest in Aurum, it is wise to go for smaller coins. Nevertheless, the premium payment is higher. 

This is only wise if you are going for coins, but if you are looking to get essential metal value, we do not recommend this choice. 

iii. High Value, Less Storage or Low Value, More Storage

As an investor with several assets saved over the years, gold is the best investment option. Thanks to the high value of the metal per ounce coupled with the high density of the metal, a small storage box can hold huge chunks of wealth.

For example, $40,000 is the equivalent of 1 roll of 1-ounce gold. Yet, you can hold this comfortably in your hands. To hold silver coins with the same value, you will need several large boxes. 

Therefore, if you want to keep your storage compact, Aurum is the best. However, if you are not concerned about storage space, then nothing is stopping you from going for Argentum. 

2. Investment Volatility

When compared to stock prices, these items are not as volatile. Both commodities tend to move side by side with silver falling or rising alongside gold. The reason behind this sort of synchronization of movement in the market is a result of both metals being in heavy demand by investors that want to protect their wealth. 

The industrial application of silver in several industries causes this asset to experience more price movements. Due to the low price of this metal, a little price shift of about 100-cent upward has a higher percentage gain compared to an increase of $40 in the price of gold. 

The increased volatility will not be significant to investors that plan to store Argentum for a long time. However, investors that will receive a distribution soon need to monitor the price movements to ensure that they get the best gain when they finally sell their assets. 

3. Demand 

These items play different parts in the affairs of the economy which leads to differences in their demands. Let us look at a few of these demands:

i. Jewelry 

The jewelry business used to boast of the highest demand for gold. India and China are the nations with the highest demand for this commodity. Visit https://www.investopedia.com/news/top-10-countries-highest-demand-gold-jewelry/ to check out the countries with the highest gold jewelry demand. Silver is also demanded as jewelry; however, it is not as impactful on the industry as that of Aurum. 

ii. Investor

Another major demand market for Aurum is investor demand. The unstable nature of the economy around the world has made investor demand become the number one demand source instead. Furthermore, coupled with all kinds of gold investment these days ranging from keeping physical bullion, ETFs, gold IRAs, investor demand is not diminishing anytime soon. 

In the same vein, silver demand from investors has increased in recent times. It is projected to further skyrocket as investors with less money will see it as an alternative to gold to protect their wealth. 

iii. Industrial

Argentum has the upper hand when it comes to the demand from industry. Half of Argentum’s demand comes from this source, whereas only 10% or less of the overall Aurum demand comes thanks to industrial applications. 

Conclusion

You could choose to invest in either a gold or silver IRA, but you need to understand which option is best for you. There are situations when investing in Aurum is the best, and there are times when investing in silver is.   

All you need to do is use the information we shared with you and determine which works best for you. You can also consult an IRA professional to help you decide. 

Categories: Finance