Gold and silver have always been safe havens for hedging, surviving a long history of market crashes, inflation, demonetisation, depreciation of the rupee, and so on. A tried and tested inflationary tool, gold and silver investments are sought after by Indians, especially during the Dhanteras–Diwali festive season. So what would you choose—Silver or Gold?
Like every other asset, both metals have their share of green and red cycles. At the end of the day, you, as an investor, need to keep the following in mind when picking a precious metal this Diwali:
Ease of Liquidity
Both silver and gold are highly liquid assets due to high demand. But gold enjoys a little bit more liquidity due to it being more precious.
Volatility Indicators
Silver has always been more volatile than gold. This is due to the fact that silver is not as rare as gold. On top of that, silver is used in various manufacturing industries. Therefore, this adds to the change in demand. Therefore, the risk in silver is much higher, but so is the leeway to make more profit. Compared to silver, gold is more stable, according to Morgan Stanley.
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Storage Costs
Gold, due to its value, can be stored easily in smaller amounts. However, it needs more security. For the same value, silver takes up more space. Being denser than gold and due to the fact that the white metal gets tarnished more easily, storage facilities for silver need to be dry, shooting up storage costs.
Pledge Ability
Most banks and the government have gold reserves. The State usually does not pledge silver. Therefore, silver is more insulated from geopolitics. However, this also means that gold is always more valued due to active pledging by the State.
Demand in India
In a historic move, silver outshone gold this Dhanteras in India. Consumer demand for the yellow metal was impacted by gold prices jumping to record levels, forcing more and more people to pick silver.
According to the Indian Bullion & Jewellers Association (IBJA), sales of silver soared by 30 per cent to 35 per cent this year. Compared to Dhanteras in 2023, silver was 40 per cent dearer, yet it showed no dip in demand. Demand for gold, however, fell by 15 per cent from the same time last year.
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Apart from the demand for silver in jewellery, the spike in use due to an actively growing EV sector pushed its prices even higher. The white metal consistently kept itself above Rs 1 lakh per kg, while gold breached Rs 82,000 per 10gm in Indian markets this week.
Your Pick
Finally, no matter what these indicators above say, it is finally your choice as both consumer and investor to pick silver or gold.
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