With the price of gold all over the news this week after hitting and holding all time highs, I thought I'd share my views as to what I'm doing these days.
As gold is making headlines, this is likely spurring many more "sheep" to it and creating some interest. Many often get stuck with FOMO in such a situation and are likely wondering if they should be buying some gold as they are hearing about it's all time high price on MSN, from friends and colleagues, on Youtube, etc. Heck, even Costco is selling gold and silver now. We seem to be entering the hype phase.
Many of us already know that owning some physical gold and silver can have several benefits to our financial independence, privacy and peace of mind as they act as a hedge against inflation, help to preserve our purchasing power, and can help to grow wealth over the long-term. Many of us have likely been holding some physical gold and silver for awhile and bought when the prices were considerably lower.
Gold and silver often get a bad rap from investors as they think that these precious metals don't do anything: they don't provide a dividend; they don't appreciate in price and provide a capital gain; and you can't trade them as they just sit there collecting dust. Instead they typically opt for trading stocks, mutual funds and ETFs using an app in hopes of making a quick buck.
In a recent article in the Alternative Finance group in the Self-Sufficient YOU! community , I showed a long-term chart which demonstrated the difference in investing in gold vs the Dow Jones Index and the fact that owning gold provided a larger return in comparison.
So, with gold in the news at an all time high of $2,940/oz CAD as of yesterday, what am I doing these days?
"I'm buying silver".
Unlike gold, silver has a much higher benefit to society as it's used in various industrial applications such as medical devices, electronics, solar panels, smart phones, automobiles, etc. Silver is one of the world’s best conductors of electricity, allowing its use in electronic components such as wires, switches and printed circuit boards. The combination of ductility and electrical conductivity makes silver perfect for micro-electronics devices. Silver also exhibits the unique property of penetrating bacteria cell walls allowing silver ions to be employed as a biocide which is growing increasingly important as overuse of chemical antibiotics is causing some bacteria to become immune.
Demand for silver is rising while supply is shrinking. Between 2014 and 2023, supply has decreased from 1,054 to 1,024 million ounces, while demand has increased from 1,011 to 1,167. With the trend towards "alternative energy", demand will only increase with more EV cars, solar panels, electronics devices, etc. With the price of silver still low and the cost of energy rising, it makes it very difficult for silver mining companies to make a profit thus creating a disincentive to ramp up more exploration and production.
Silver is still far from its all time price high. The price of an ounce of silver today is about $24.39USD and it haven't moved much when compared to gold. At this price, silver is more affordable for more people when compared to gold and it's far away from its all time high of almost $50/oz back in 2011. The bottom line is that silver has the potential to move higher compared to gold which is already at its all time high.
Conclusion
IMHO, having both some physical gold and silver is important as they each have different financial benefits. Gold acts a great hedge against inflation, a safe haven, and a wealth protector and preserver; while silver has many of these characteristics with the added benefit of investment potential given its many industrial uses.
Given where the price of silver is compared to gold these days and its wider benefit and uses in society, I prefer silver over gold right now. Gold is at all time highs and silver still have lots of room to grow to get there, and with its greater industrial uses and current demand/supply situation, silver looks like a better buy than gold to me. Plus, at only $32.84/oz compared to gold at $2,940/oz it's considerably more affordable for more people.
~ David LeBlanc
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