Gold has always been the “go to” investment in times of uncertainty, and rarely has there ever been more uncertainty than now.
There are many different economic drivers that play a role in gold’s value. The U.S. Dollar is no longer tied to gold, but gold does have a connection to the U.S. Dollar. Gold trends higher in value when the dollar weakens and lower when it strengthens. Geopolitical instability, reckless monetary policy and inflation can also put upward pressure on gold’s value.
Central banks across the globe have re-examined the role gold plays in their asset holdings. Since the 2008 financial crisis we have seen significant increases in their gold reserves.
Given its rich history as a monetary metal, long-term store of value, and for reasons stated above, gold is preferred by many investors who are looking for wealth preservation.
Silver has long been called the “poor man’s gold” because throughout history silver has been used more as money than has gold. Another reason that silver trades at about 1/80th the price of gold is that it is much more abundant. By some estimates, sixteen times more silver has been mined than has gold.
Silver is also more volatile than gold, meaning that its price fluctuates more widely than does gold’s.
Large investors prefer gold over silver because much more wealth can be stored in gold than in silver. For example, a $33,000 investment in silver would weigh about 134 pounds; however, $33,000 invested in American Gold Eagles would weigh right at two pounds.
If silver truly is the “poor man’s gold,” then small investor should stick with silver. They get more metal for the money invested, which gives them greater flexibility when either selling or using it in trade.