Precious metals, like gold and silver, are perfect instruments to hedge against inflation. These also help amidst the stock market volatility and interest rate hikes that affect the debt market poorly. So, investing in gold and silver can be excellent investment opportunities, especially if your equity and debt assets have not been performing well lately.
Precious metals, like gold and silver, have always been part of an investor's portfolio. Many, however, vouch for the price rise in gold.
So, if you are looking for a clear winner in the gold vs silver investment options, consider comparing them against the following metrics.
Silver is a much more volatile asset class. With an extensive demand based on economic situations, the price of silver varies vigorously.
On the other hand, gold has been known to be one of the most stable asset classes, with a consistent rise in its price. Additionally, the higher demand for gold as jewellery makes it more valuable.
Silver is also used for making jewellery, but its most significant application remains industrial. So, in this segment, gold is a clear winner.
Due to higher liquidity, gold is always in demand, making it easier to exchange it. Moreover, the price of the market rarely affects it. The yellow metal, therefore, is considered a much more liquid asset than silver.
Both gold and silver are used at large scales across various industries. This attracts many retail investors and encourages them to invest in gold and silver.
But when discussing gold vs silver investment, it is imperative to find the answer to the question, "Is gold or silver a better investment?"
First, gold is an excellent conductor and has other use in the electronics and thermal sectors. This increases the value and demand of the yellow metal beyond jewellery and is a hedge against volatility and inflation.
Conversely, silver is primarily used in pharmacy, automobile, manufacturing, and thermal sectors. With a higher demand for industrial applications, the price of silver directly correlates with the economy.
Of course, gold is a much more expensive metal than silver. Moreover, banks and the central government maintain their gold reserve. But the same does not apply to silver, which puts gold on a pedestal.
But this also makes silver a more affordable option that promises higher returns due to market volatility.
Investing in gold and silver can be a good hedging option and give inflation-beating returns. So, the answer to the question "Is gold or silver a better investment?" may be subjective. Ultimately, it depends on an investor's risk appetite, financial goals, and personal preference.
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One can start investing in gold and silver in India in various ways. All you would need is a Demat account and a trading account, and you can start adding these precious metals to your portfolio. Moreover, investors can also put their money into these metals through Systematic Investment Planning.
Silver tends to be a more volatile asset than gold due to its industrial demand. The price of silver can fluctuate heavily depending on various economic cycles and industrial productions. This makes gold a safer investment than silver, while silver may generate better returns.
Ideally, 5-10% of your portfolio should have precious metals. You can balance gold and silver to make it more stable, getting the best of gold's stability and silver's higher returns. Opting for a 75%-25% (75% gold, 25% silver) approach is a good choice when investing in gold and silver.
