Gold and silver: As different as individual investors

Gold or silver? That’s the question for many an investor who want to invest in precious metals, sooner or later. A central aspect in answering this question for every investor is the optimal distribution. It arises not only when buying bars and coins, but also when purchasing silver or gold producers via the stock exchange.

Since both gold and silver offer investors specific advantages but also have limitations, the answer is anything but easy to find, as it is closely linked to the investor’s personal situation and psyche.

When investing in coins and bars, the answer is comparatively easy to find. Gold is a reliable store of value. For centuries, it has offered reliable protection against the loss of purchasing power of currencies. However, buying gold will not make you rich, as there has never been a real shortage of gold over a longer period of time in the past. There has always been a lack of real consumption.

Will China soon drive the silver price to new records?

However, this is the case with silver, as silver is not simply hoarded like gold, but is consumed industrially. In principle, it can therefore become very scarce. This real danger is the starting point for further price increases. In the past, the world lived off its silver reserves. Shortages were balanced out by stocks, so that the deficit on the silver market did not yet have too much of a price-driving effect.

However, this could soon be the case, as the Silver Institute has significantly increased its deficit forecast for 2024. At the same time, China is calling on its citizens to invest in silver instead of gold. Should the high Chinese gold demand now also spill over into silver, the situation could easily escalate, as silver has so far been less accepted by most investors than gold.

If this changes as a result of the Chinese example in the coming years, silver will start a rally that will far overshadow that of gold, because the silver market is smaller and the potential is enormous. Silver therefore offers investors the potential for a real increase in value.

Because it is largely in industrial demand, its price is subject to cyclical fluctuations. These fluctuations and the massive undervaluation compared to gold currently make silver particularly interesting for investors who have a long investment horizon and can cope well with higher volatility.

Silver stocks have even greater potential

Silver stocks will not only follow this development, but will also accompany it with leverage on the silver price. Investors who would like to participate in the expected rally with silver stocks would therefore do well to identify those producers with a particularly high leverage on the silver price in advance.

But don’t be fooled by the company name. Although First Majestic Silver has the word silver in its company name, First Majestic is currently more of a gold stock, as more than 50 percent of the company’s revenue comes from the sale of gold. However, Silver Storm Mining (WKN A3EWAU), which has been followed by Goldinvest.de for some time, intends to become a silver producer in the near future. Interestingly, by putting an old silver mine of First Majestic Silver back into operation…