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Why Is Silver Less Expensive Than Gold?

Introduction

A question we get asked quite often by those new to gold and silver bullion investment is 'Why is silver cheaper than gold?'

Rarity

One of the main reasons why silver is cheaper than gold is the metal's rarity. The supply of gold is less abundant than silver; hence, the price differentials between the two metals.

Mining

Raw (Dore) gold & silver are mined from locations worldwide. The extraction processes, however, differ in terms of difficulty. Gold is known to be more difficult than silver to extract. The differences in the procedures involve the higher cost of mining gold than silver.

Properties

Gold has been used as a form of money for centuries; it doesn't tarnish like silver. The low maintenance nature of this metal may also add appeal, adding a few extra digits onto the price. Gold and silver are malleable metals that can be easily shaped into coins, bars and jewellery. However, gold has a higher density than silver which means a little can go a long way.

Aesthetics & Status

The use of gold and silver in jewellery can help drive up prices – more so for gold than for silver. Gold's beautiful & warm colour is a status symbol for the rich and powerful. History has shown that the discovery of gold and its appreciation dates back to 40,000 B.C.

Gold and Silver Bars

Demand is always high for something regarded as rare, precious and beautiful. Because demand is high, the price can be increased without the market turning away. The constant need for jewellery, coins, and bars makes silver and gold valuable.

Summary


Gold is much rarer than silver, and this imbalance in supply and demand between the two metals makes up most of the difference in their prices.
However, both precious metals have significant value. Gold and silver are the most popular of precious metals because they have functions outside of investment purposes, such as jewellery and industry. And, although one more so than the other, both are rare commodities, making them in high demand.

Both metals are popular investment choices. However, silver's price should not wrongly deter any potential investors. A wide range of coins and bars are available, and its lower price can make it easier to obtain and stack.

For many, an investment portfolio that includes both gold and silver is a smart way to prepare for the future. The prices may fluctuate, but precious metals will always remain a store of value. Physical gold and silver are often held to hedge against inflation, add security in times of economic or political uncertainty, or simply something to keep for a rainy day.

Source

Atkinson Bullion

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