Precious metals investors rely on a variety of analytical tools and methods to try to decide what the best way to spend their money is. They compare gold to major stock exchanges, inflation, the U.S. dollar. They even compare precious metals against each other.
One metric that precious metals buyers use to analyze performance is the gold-silver ratio: the average price relation between the two metals. Historically, the ratio has been around 16 ounces of silver to 1 oz. of gold. Today, it’s closer to 80, while during the late 2000s precious metals bull market, it was closer to 50 and shrinking.
The way the ratio contracts during precious metals bull markets makes the metal a very tempting investment option for those who are bullish on precious metals. It means that when both prices are rising, silver prices rise faster. But that doesn’t mean that the metal is always the right choice for your money.
What Drives Silver Prices?
The two biggest driving factors of these prices are market sentiment and industrial demand. Like gold, it’s subject to a great deal of market sentiment – speculative investors who are looking for anything to do with their capital. The effects of international capital looking for a place to park can’t be ignored. Many believe that global real estate investment in major centers like London, San Francisco, and Toronto have been at the core of an affordability crisis.
But the metal also has a wide range of industrial uses, including new markets such as medicine due to its antibacterial properties. Industrial demand collapsed as digital photography made camera film essentially obsolete, but new markets are causing a renewed supply crisis in a way that gold, with limited industrial uses, is unlikely to see in the near future.
Gold vs. Silver
In the UK, silver bullion is subject to VAT charges of 20 percent. You need prices to grow by at least 20 percent before you start seeing gains. During a bull market when prices can double, triple, or more, that’s no problem, but it’s difficult to anticipate the kinds of conditions that set off that kind of speculative demand. If you’re searching for a precious metal that has the potential for aggressive growth, silver is a smart idea. If you’re hoping to find a safe investment where you can park your wealth and defend against mark uncertainty, VAT-free gold is a much better option.
As with many investments, the right choice depends on your goals. Find the precious metal that matches your investment goals and the needs of your portfolio to succeed in the precious metals game. You can read more about buying online and which types work best for investments. There is a big difference between collectible coins and bullion coins. Bullion coins and bars are the smartest, most straightforward investment tool, but there are many variations within those categories. Buy silver online and see what it can do for your wealth management.