by Bob Harris
Like any investment decision, the first question you should ask yourself is “Why?”. What is the purpose for this investment? For purposes of this discussion, we are considering the optimal investment between gold and silver in the event of an economic collapse and/or complete devaluation of the dollar – not as a long-term investment under normal market circumstances.
For starters, silver and gold have both been used as a form of currency for thousands of years – much longer than paper money backed by someone’s promise to pay. Both precious metals can also be sold or exchanged virtually anywhere in the world, but gold definitely has more readily accessible formal trading markets, so that gives gold a slight edge.
Few would argue that silver or gold provide a good hedge against monetary or economic crisis, but which one currently makes the most sense? Let’s start by considering the historic ratio of the value of silver to gold to get an indication of when it is a good time to purchase one over the other.
During the 1900’s, this ratio was approximately 47:1 in favor of gold. So far this century, that ratio has been closer to 61:1. Since we are currently sitting at 78:1, it seems that this relationship is due to return to a more reasonable level, favoring silver as the better option of the two.
Another major consideration is that silver continues to be used in nearly every industry, including jewelry, medical products, electronics, batteries, cell phones and even solar panels. Some consider silver indispensable to our daily needs because of its wide use and application.
As a result, the amount of silver available for investment/monetary purposes is declining, while the demand for silver (especially for industrial uses) is increasing, resulting in a natural tendency for the value of this item to increase over time. Silver gets the nod here.
Silver is also easier to exchange or barter with due to lesser value per ounce. Other parties may not be able to make change for a $1,300 gold coin, whereas making change for a $17 silver coin would be much easier to do. In a barter type system, this would make silver a better play.
On the flip side of the coin (pardon the pun), one significant benefit gold provides is that you can transport much larger values for much less weight, and store it without taking up as much space, making it both more portable and easier to store between the two choices. If either of those are your reasons for purchasing precious metals, you might consider gold as your best option.
For those of you that have the budget, I believe it would be a wise choice to have a little (or a lot, if you have a BIG budget) of each to be best prepared for a complete economic collapse. Ultimately, unless you plan on storing or transporting a lot of your precious metals, I would lean toward silver as the precious metal of choice in this scenario.
Now that we have spent some time discussing whether to buy gold or silver, we should also take into account some of the benefits of “junk” silver. This will be the topic of our next discussion.