Is Silver Worth More Than Gold?


by Grant HEnson

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Precious metals have long been considered safe haven assets that are the most practical way of preserving the purchasing power of money as a whole. However, none of the other metals can match the sheer popularity of the two most popular ones; gold and silver. 

Both of them retain their value exceptionally well against inflation, but they are not the same. Their differences stem from key factors such as market value, industrial use, and historical significance. Understanding these differences is crucial to gauge the present and future worth of both assets — allowing us to answer the key question of this article: Is silver worth more than gold?

Based on the price per ounce, the short answer is no. Gold is almost 100x the price of silver in 2024. However, if you are wondering whether silver will be the better investment in the long-term, let’s find out!

Understanding the Basics

The first thing most would notice about these metals is their striking appearance. 

Silver is a highly reflective precious metal with a white, glossy appearance while gold shines with its brilliant yellow hue. Both are quite beautiful to look at. Though, when it comes to overall value, gold takes the cake as it also weighs more than silver and is harder to obtain.

Speaking of value, the price of gold is mainly affected by inflation or economic concerns as investors seek out "safe haven" investments.

Silver, on the other hand, has lesser liquidity in financial markets and greater significance in industrial processes. Its significance for consumer products surpasses that of gold — contributing to its current market value. 

So, in addition to market factors like inflation, the price of silver can also fluctuate based on industry supply and demand.

Historical Context

We can find many instances throughout history where the value of silver approached or even surpassed gold. Ancient Egypt, for example, believed silver to be rarer and more valuable some 5-6,000 years ago.

Throughout history, different cultures also had different associations with both metals with varied uses across jewelry, architecture, cutlery, and religious customs.

That said, things have been fairly stable in the modern era with gold on top.

Let’s go back a century, for instance.

At the end of 1925, the price of an ounce of gold was at $20.64 while silver priced at just 69 cents. Fast forward to the 1970s and we see a very similar trend. As the US abolished the gold standard in 1971, people lost trust in the dollar and started investing in gold and silver — increasing their prices. 

Both of these metals then reached new peak prices in the 1980s with gold at $677 and silver at a bit over $36. So despite a drastic increase in investments, silver still remained significantly behind gold. 

We can also observe another trend from the historic price movements of silver and gold where silver often exhibits greater volatility than gold. Yet, despite its volatility, silver has experienced notable price hikes — retaining its status as a viable investment. 

Market Dynamics

Gold prices reached an all-time high of $2,062 per ounce at the end of 2023 as a result of predictions of Federal Reserve rate reduction and a weakening of the US dollar. Geopolitical unpredictability and central bank buying helped the precious metal rise to historic highs. 

Unfortunately, silver saw severe fluctuations but is currently relatively stable with its price hovering between $22 and $24 per ounce. 

In our experience, these price trends can be traced back to the following factors as they have a direct impact on the value of these precious metals:

  • Supply and Demand: The dynamics of supply and demand have a significant influence on gold and silver prices, just like they do on any commodity. Prices for these precious metals typically rise in response to an increase in demand. On the other hand, if supply exceeds demand, prices can drop.
  • Reserves Held by Central Banks: These institutions have both gold and paper money on hand. But, the main commodity in the reserves of many countries is gold. So, the price of gold usually rises as they diversify their financial holdings from paper money to gold.
  • Value of the US Dollar: The US dollar's value and the price of gold frequently move in opposite directions. Gold becomes a more appealing inflation hedge when the dollar declines.
  • Political Concerns and Uncertainty: Investors may turn to gold and silver as safe-haven investments in response to geopolitical tensions, economic instability, and worldwide concerns. A similar situation is unfolding right now with the Ukraine war in Europe and the looming threat of a recession.

Industrial and Technological Uses

When it comes to industrial uses, the two precious metals could not be any more different. 

Avionics, electronics, and dentistry are among the only industries that use gold thanks to its corrosion resistance. 

It is mainly recognized for its historical use as an international money and store of value. So, gold's primary use is as an investment asset, which is traded via exchange-traded funds (ETFs) and futures contracts.

Silver, on the other hand, is a highly sought-after resource due to its wide range of industrial applications. We’ve seen it used in the production of automobiles, solar panels, water purification, and silverware. It is also a key ingredient in medical manufacturing due to its antibacterial properties.

For many industries, silver is indispensable, as evidenced by its widespread use in everyday life — from electronics to medicinal applications — in contrast to gold, which devotes a lower supply of its resources to industrial uses.

For a more thorough comparison, we’ve created this following table:

Usage

Gold

Silver

Primary Purpose

Store of value, international currency

Industrial applications, diverse practical use cases

Market Presence

These metals are traded on the stock market, ETFs, and futures

They are widely used in auto manufacturing, solar panels, etc.

Industrial Demand

Gold has a lower industrial demand

Silver has a higher industrial demand.

Technological Contribution

Gold has limited technological applications

Silver, on the other hand, has extensive use in electronics, medical tech, and more

Economic Impact Susceptibility

Gold is less impacted by economic fluctuations

Silver is more susceptible to economic booms and busts

Investment and Market Perception 

Both gold and silver are becoming more popular among individual investors and the market as a whole. However, although the demand for gold has always been higher, the silver market is beginning to catch up. 

An analysis prepared by Oxford Economics for the Silver Institute forecasts double the growth rate of the previous ten years — that is, a 46% increase in total demand between now and 2033. Even the demand for jewelry and silverware, which significantly decreased in 2023, is expected to increase by 34% and 30%, respectively, over the next ten years. Together, these two categories accounted for 60% of the demand for silver this year.

From these forecasts, we can see that silver is viewed as a reliable asset that might experience a price recovery in 2024 as a result of its increasing market demand. 

Conclusion 

When it comes to investment, silver is practically unknown compared to gold despite its industrial applications and low cost. 

It is more reasonably priced than gold — giving investors more purchasing options. But, silver is also less liquid and more erratic. 

Given these variables and their reliance on several industries, it might be challenging for us or any other experts to accurately forecast the state of the silver market in the coming years. 

Besides, the base concept of “worth” is not as solid as you might think. All it would take is a single industrial invention reliant on silver to drastically increase its demand and thus its price. 

So, instead of looking for predictions of future value of silver or gold, we suggest investing in precious metals based on current conditions and your personal investment preferences.

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